Data Day, earnings season and another money injection

23 באפר׳ 2020

All the most interesting yesterday in terms of price dynamics again occurred in the oil market. But past enthusiasm was no longer observed. On the start of the day oil was kicked more by inertia than by a fit of enthusiasm. Which suggests that the worst is behind. Of course it’s too early to completely relax, but perhaps it’s already possible to take breath. Plus, finally, there was a clear explanation of the mess on Tuesday. With Monday everything was clear - the expiration of the May contracts. But why did they beat July futures on Tuesday? Their expiration is far ahead. The whole thing turned out to be the decision of the world's largest oil ETF, which owns from 1/5 to ¼ of all oil futures to reposition and move its position from June futures to July and other longer periods. That is, there is logic in the events and it is more connected with technical issues than with the fact that the laws of the economy stopped working.

One more interesting thing for us was a statement by an analyst at Mizuho Bank that oil could reach -$ 100 per barrel. When such forecasts appear in the market (from the past, one can recall Bitcoin at 100K or even 500K, Tesla at 2K per share, etc.), then the situation has already reached the terminal stage.

From the news of the day, it is worth noting the successful passage of legal procedures in the United States of another package of aid to small businesses of almost $ 500 billion. The stock market met this with moderate optimism. In general, investors can be understood, especially those who read the Delta Air Lines quarterly report. For the first time in 9 years, the company reported losses. After a profit of $ 730 million a year earlier, in the first quarter, losses amounted to $ 534 million. But this is only the beginning of the problems. The company predicts a drop in revenue in the second quarter of 90% (!). This is where the company's problems will be demonstrated in all its beauty.

So we do not get tired of reminding about the feasibility of sales in the US stock market.

Thursday will be an exceptionally busy day for financial markets in terms of macroeconomic statistics. Traditionally, for the last time, the main attention will be focused on jobless claims data. Another terrible figure is expected in the region of 4 million. In light of what has been happening on the oil market recently, as well as the inability of the system to process applications, we will not be surprised if the data comes out again above 5 million.

In addition, on Thursday will be published PMI indices for Germany and the Eurozone in general, the UK, as well as the United States. This will be the April data, so there is every reason to expect the worst data you can imagine. Accordingly, the euro and the pound will probably be under pressure. And after US data the dollar in turn can be under pressure.

In general, the day expects to be volatile not only in the oil market, but also in the foreign exchange and stock markets.