November 19, 2020

Stock Futures Flat, U.K. Close To Sign Another Trade Deal

Stock Futures Flat, U.K. Close To Sign Another Trade Deal

European and U.S. futures are trading almost flat as news of new restrictive measures to control the coronavirus has overshadowed the vaccine’s progress. For traders, this near-term risk is greater than the potential vaccine, and it is going to leave a deeper scar on the global economy. This means that economic activity is going to face more weakness, and if there is no further fiscal support, especially in the U.S., the recovery will stall. 

Coronavirus update 

Coronavirus cases are surging around the globe, and this is giving traders a perfect excuse to book some profit from their recent trades. Tokyo has raised its coronavirus alert to the highest level in order to curb the coronavirus numbers. In the U.S., deaths caused by coronavirus have topped the 250K mark. New York has announced that it will be shutting down schools as the infection rate has surpassed a critical level. 

Australia has brought one of the strictest measures by banning outdoor exercise and dog walking. 

In terms of vaccine news, Pfizer has taken the lead. The efficacy rate is 95% in line with its new data, which is even better than Moderna. However, challenges are still there in relation to logistics. Pfizer’s’ vaccine will require extreme freezing temperatures for transit. 

Trade Agreement 

U.K. is about to sign its second-biggest trade agreement outside of the E.U. Only a few weeks ago, it signed a trade agreement with Japan as an individual country. This time, it is with Canada. Traders are thrilled about this news. The speculations are that the trade talks between the two countries are in the final stages, and soon both will be signing a trade agreement. The U.K. is the third biggest trade partner for Canada after the U.S. and China. Canada’s exports to the U.K. amounted to nearly C$14 million ($10.7 billion) this year, and it has imported goods worth nearly C$6.9 billion. 

If this trade agreement is signed between the two countries within the next few weeks, it will be a major credit for Boris Johnson. The trade agreement will enable the U.K. and other countries to forge a deal before next year. This is because the U.K. will leave the E.U. from January 1st. 

In terms of Sterling, the currency has bullish momentum, and news like the above is going to make traders more comfortable. Any announcement in relation to the individual trade agreement with other countries is likely to reduce the uncertainty with respect to Brexit, and this could easily push the Sterling all the way to 1.35 against the dollar. 

Bitcoin 

Cryptocurrencies have roared back to life as the crypto king crossed the 18K mark yesterday. However, today, we see some retracement in terms of the Bitcoin price. This could be a positive for the Bitcoin price as the current consolidation lowers the Bitcoin volatility. The door is still wide open for the digital currency to challenge its all-time. 

Commodities 

In terms of gold prices, we see more sell-off for the precious metal. This comes at a time when the dollar index is already quite weak. This shows that investors have started to move away from safe-haven assets, and they are more motivated to deploy their capital in riskier assets. The Gold price is still trading above the 200-day SMA on the daily time, and this is the last hope for the bulls. If the price drops below this moving average and stays below this, we could see some intense sell-off. 

As for the oil prices, they continue to slip from their highs as investors have become concerned about the surge in coronavirus cases. There is an increase in tension between the OPEC+ members about the oil quota, which was introduced to curb the oil supply. If OPEC fails to repair these cracks in agreement, another oil supply war could break out, and everyone will start pumping as much as they want, which could be negative for oil prices.