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January 26, 2021

FOMC announcement on Wednesday! DAX: +1.97%

IMF raises forecast

IMF raises forecast

During the session on Tuesday, the International Monetary Fund raised its forecast for global economic growth in 2021, and also suggested that the coronavirus trigger downturn in 2020 would be nearly a full percentage point less damaging to world GDP than initially thought. This is due in large part to the IMF forecast that by 2022 we should see low levels of Covid-19.

One of the things the organisation referred to was the multiple vaccine approvals and the launch of those vaccinations in several countries in December just gone. This boosts hopes of an eventual end to the pandemic, which has killed 2.1 million people globally and infected over 100 million. Unfortunately, close to 90 million people are expected to fall below the extreme poverty threshold during this timeframe. The pandemic has wiped out the progress made in reducing poverty over the last two decades, as large numbers of people around the world remain unemployed or underemployed including in some of the stronger economies like the United States and Germany.

In its latest World Economic Outlook, the IMF suggests that the 2020 global contraction was 3.5%, which is better than the previously anticipated 4.4% for the year. It also has predicted global growth of 5.5% in 2021, an increase of 3/10 of a percentage point from the October forecast.

Meanwhile, the UK passed a galling milestone today, with over 100,000 deaths now owing to the pandemic. Whatever the reason behind this awful death toll, one thing is for sure, there will be an inquiry into it and questions will have to be answered.

Johnson & Johnson expects COVID-19 vaccine data next week

Johnson & Johnson expects COVID-19 vaccine data next week

Johnson & Johnson said on Tuesday that it expects to report data on its own Covid-19 vaccine early next week, and that it should be able to meet the delivery target for doses to countries that it has signed supply agreements with. Public health officials are increasingly counting on single-dose options like the one currently being tested by Johnson & Johnson, as it simplifies the process and boosts inoculations. The slower than anticipated rollout of authorised vaccines from both Pfizer and Moderna have caused massive headaches.

Johnson & Johnson had its quarterly earnings call early in the session on Tuesday, forecasting profit well above Wall Street estimates for the year 2021, while shares rose 3.4% to reach $171.55 early in the day. The expectations by the corporation do not include the vaccination project, which if it proves to be effective, certainly would only boost revenue.

United Kingdom to unveil quarantine plans

United Kingdom to unveil quarantine plans

Britain will announce within the next 24 hours whether or not it is going to bring into the fray a mandatory quarantine in hotels for some or all arrivals, the countries coronavirus vaccination minister said, also adding a warning for the public not to book summer vacations. Prime Minister Boris Johnson has stated previously that he was looking at the option of introducing quarantine hotels for those coming to Britain to prevent the risk of new coronavirus variance entering the nation, at the travellers’ own cost.

Currently, there has been “no definitive decision yet” on those coming from other parts of the world, but there are a handful of areas that would almost certainly be affected, including Portugal, Southern Africa, and South America.

Global Equity Markets

Global Equity Markets

Equities traders were positive in all but one market that we follow as most traders are waiting on what they assume will be a very dovish Jerome Powell out of the United States. The FTSE 100 has gained 45 basis points, the Germans were up almost 2%, while the French were up 1.44% during the session. The S&P 500 was up just four basis points and treading water at all-time highs, while the Japanese were the lone sellers for the day.

Index Change
FTSE100

FTSE100

0.45

DAX

DAX

1.97

CAC40

CAC40

1.44

Nikkei 225

Nikkei 225

-0.96

S&P 500

S&P 500

0.04

Currencies

Currencies

The US dollar fell against the four major currencies that we follow, with the Euro gaining 2/10 of a per cent, and the British pound gaining ½%. The dollar lost 11 basis points against the Japanese yen, and the Australian dollar rose 44 basis points in what has been a relentless drive higher over the last several months. As the idea of the “reflation trade” continues to dominate headlines, the Aussie has been one of the big winners due to its correlation with commodities.

Index Change
EUR/USD

EUR/USD

0.21

GBP/USD

GBP/USD

0.5032

USD/JPY

USD/JPY

-0.1147

AUD/USD

AUD/USD

0.4431

Commodities

Commodities

Commodity markets were a bit mixed during the trading session, with gold losing 15 basis points while silver gained almost ½%. The Brent market was essentially flat, as was both the platinum and copper markets. It should be noted that both platinum and copper have been on very strong runs higher as of late and are essentially consolidating the gains recently enjoyed by traders.

Index Change
Gold

Gold

-0.15

Silver

Silver

0.46

Brent

Brent

0.13

Platinum

Platinum

0.17

Copper

Copper

-0.18

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