TOPICS MENTIONED IN THIS MARKET BRIEFING:

• European stock markets buoyed by signs of recovery
• Wall Street hope on the stimulus plan
• Chart of the day – AUD/USD: A double resistance

EUROPEAN STOCK MARKETS DRIVEN BY SIGNS OF RECOVERY

European stock markets ended higher on Wednesday, driven by signs confirming the recovery of the economy in Europe and by the hope of an agreement in the United States on a new recovery plan.

The confidence of European investors is not shared by everyone, the dollar falling further to bring its decline against a benchmark basket at 10% since the beginning of March.

The negative correlation between the dollar and gold is helping the precious metal, which also benefits from negative real interest rates, to break records, which is not necessarily a good sign for the medium-term economic outlook.

For the time being, equities continue to thrive, still buoyed by massive liquidity injections from major central banks.

Thus, the CAC 40 index gained 0.90% to 4,933.34 points. The Footsie advanced 1.07% and the DAX 30 advanced 0.47%.

WALL STREET KEEPS HOPE ON THE RECOVERY PLAN

Wall Street ended higher on Wednesday, driven by unexpected results from Disney and hopes of an agreement in Washington on a plan to support the American economy in the face of the coronavirus pandemic.

The entertainment giant surprised its world by publishing unexpected results for the second quarter on Tuesday evening.

More generally, the financial results of American companies were less bad than expected, supporting the rating.

At this stage of the "earnings season", 384 companies listed on the S&P have published their results, on average 23.5% higher than analysts' expectations according to Refinitiv data: such a gap is unprecedented since 1994.

Investors are also counting on a positive outcome of ongoing discussions in Washington between Republicans and Democrats on a plan to support the economy.

The day's macroeconomic data were mixed, with growth in services at an unprecedented rate for 16 months but a sharp slowdown in private sector employment.

Consequently, the Dow Jones, took 0.62% to 26,664.40 points. The Nasdaq advanced 0.35% and the S&P-500 gained 0.36%.

Otherpoints on the news of the financial markets

FOREX
The dollar index, which measures the fluctuations of the greenback against a basket of six other international currencies, lost 0.8%, near a two-year low. The euro took the opportunity to rise towards 1.19 dollars.

Oil
Oil prices gained around 4% after the announcement of a much stronger than expected drop in crude inventories in the United States last week.

A barrel of North Sea Brent is trading at around 46 dollars and American WTI light crude around 43.33 dollars.

Today's economic calendar:

CHART OF THE DAY – AUD/USD: DOUBLE RESISTANCE

On this chart in weekly data, the Australian dollar continues to rise against the US dollar which continues to suffer. However, the pair might pause in the coming days. Prices are facing double resistance, the polarity area around 0.7200 and the 200 period moving average.

Sellers are likely to come in close to this major level, so a consolidation phase inside a range is a possible scenario. In the short term, the market could stabilize between 0.7200 and 0.7020.

In the event of an exit from the top, accompanied by a breakout of the 200-period MA, the AUD/USD would resume its upward path to rally the next resistances. On the other hand, the break of the support at 0.7020 would open the way to a potential market reversal towards 0.6825.