It is difficult to find adjectives capable of painting the most reliable picture of the movement of markets and the global economy in the last quarter, and in particular of Wall Street and the largest economy in the world.
This is because, amazingly, the S&P 500 recorded the best quarter of the last 22 years at a time when the unemployment rate in the USA is expected to be above 12%. We will only know this on Thursday, after a GDP contraction of -5% in the first three months of the year. But, the most relevant thing is that the appreciation did not occur from a substantial correction, none of that, because despite the 30% drop until March, the fastest in the history of North American indices, the truth is that Wall Street is now at a distance of a few percentage points from new historical highs, in particular the Nasdaq.
The quarter may have been excellent for investors, but it was horrible for the job market. The increase in unemployment in such a short period of time was absolutely disruptive for a good part of the economy, but even more importantly, it put humanity in a state of alertness and anxiety, which could result in serious social and health problems resulting from the measures of isolation and increased uncertainty about the near future, in financial or health terms.
In fact, this Tuesday, in his testimony to the House Financial Services Committee, Jerome Powell, chairman of the Fed, reiterated the warnings about the imperative need to avoid a second wave of the pandemic. Powell made it clear that the US economy is not yet safe from the crisis and that if the spread of Covid is not contained, the Government and citizens may have to withdraw from economic activity again, which would substantially delay a recovery that the himself has already assumed it will take time.
Despite the uncertainties, the Bulls did not leave their credits in the hands of others and raised the bar for the second half of the year, by pulling the indexes to a comfortable valuation session, with the S&P 500 rising more than 1,5% and all its sectors adding value, among which stood out the energetics that gained 2,2%, followed by the technological ones that accumulated 1,92%.
In the foreign exchange market, the day was somewhat calmer with the US dollar declining -0,2%, helping the gold price to rise by 1% to $ 1,798 an ounce. However, this does not explain the whole movement, which is curious, since being an active haven of excellence, yesterday it was predictable that it would be under extra selling pressure.
Today's chart is gold, the time-frame is monthly.
Gold continues its upward trend, now standing at around 10% of new historical highs.