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Below is the interview with Davide Biocchi, professional trader, to whom we asked some questions about currencies, some commodities and the expected scenarios for the stock exchanges.
The euro-dollar is betting on a recovery fund deal and continues to rise. What are the possible scenarios now?
The euro-dollar now points to the 1.15 threshold and I think this target is easily reachable.
We have to understand if we think that this rise of the euro-dollar can make European equities grow more than the American ones that have already grown so much.
If this is the case, we will see purchases of euros to go buy the shares of the Old Continent and the United States for their part will do nothing to defend the weakness of the dollar which will be too convenient for exports to Europe.
For the euro-dollar, therefore, the target of 1.15 is now at hand and I do not exclude that we can go further, but we will have to understand if the weakness of the dollar will also affect Europe or if there will be some intervention to contain it.
In today’s share prices there is an agreement on the Recovery Fund: what are the reasons why the stock exchanges can continue to rise and what are the reasons why they could go down?
If the Recovery Fund deal breaks down, the stock markets will reasonably drop and some of the ones they bought will probably divest.
This will lead to selling euros to buy back dollars and therefore the cross could fall, with possible decreases even up to 1.12, where we find the first key support.
Gold is trying to push forward further and stretch the pace beyond the $ 1,800 threshold. What are your expectations in the short term?
Among the commodities I point out the silver which reached the target of 19 dollars and then the next one at 19.8 dollars.
Now Silver is trying to attack the $ 20 threshold, above which an interesting scenario will also open on a historical level, with a potential target of $ 25.
Gold is the asset class in my opinion to be kept under control, given that the overcoming of 1,820 / 1,830 points would immediately point the lighthouse on the 1,920 dollars, the previous historical highs reached in 2011.
On the downside, gold supports I see them at $ 1,790 before and at $ 1,760 afterwards.
Oil for now continues to stand below $ 41. Do you expect new hikes?
The oil, after recovering thanks to actions made above all on the supply side, has found its stability, even with the decision of Opec + last week.
The Cartel will reduce the cuts a little, but it expects the countries that had not cut before now to adapt, therefore it will remain substantially on the same production levels.
Now we begin to look more at the demand and if the latter should start to increase, then the oil can continue to rise.
Above $ 41.5 for black gold I see a long-term target in the $ 50 area, while below $ 35 I report support of $ 32.28.
In light of what has been said so far, what indications can you give us for the stock exchanges?
The stock exchanges move in anticipation of news on the Recovery Fund front, for which I expect that an agreement will eventually be found, also because this is in everyone’s interest.
The agreement will be the result of a fierce mediation between the parties that will ultimately leave everyone unhappy. The game is only at the beginning, because then we will have to discuss the subordination of loans or lost funds.
For example, what Italy will receive will be subject to the occurrence of certain situations and there will be important discussions.
On the one hand there are those who are reluctant to give money to avoid that they are used in the wrong way, on the other there are those who say not to thin too much, declaring that in the absence of the aid it will blow up, so in the end it is like if you say: “do a little bit yourself and see if you should jump in the air”.
These are the positions of the frugal countries on one side and Italy and Spain on the other.
In this context, the stock markets are moving, among which we can see that Wall Street is also taking a breath, because the quarterlies of the tech sector, which have yet to get to the heart, with Netflix have given us an unfavorable preview .
As I said before, in the event of a failure to reach an agreement on the Recovery Fund, the stock exchanges will fall, but in which case will they go up?
It is not enough that an agreement is reached because this is already taken for granted, so in this case either nothing happens or the sell on news is triggered.
For equity markets to rise further, something with some optimism will have to come out of the EU Council.
Otherwise the stock exchanges have already arrived for the agreement on the Recovery Fund.
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