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Vladimir Zernov
U.S. Stock Market

EU Leaders Agree On Coronavirus Recovery Fund

Finally, EU leaders were able to overcome their differences and managed to agree on a 750 billion euro coronavirus recovery fund which includes 390 billion euros of non-repayable grants.

The main recipients of this financial aid are Italy and Spain which were hit hard by coronavirus. Italy will get 209 bilion euros including 81 billion euros in grants and 127 billion euros in loans. In turn, Spain will receive 140 billion euros with 72.7 billion euros in grants and 67.3 billion euros in loans.

This agreement is very important politically since failure to negotiate a coordinated economic response in the face of the global pandemic would have put EU existence under question.

Not surprisingly, global markets cheer the deal. In the U.S., S&P 500 futures are up almost 1% in premarket trading as traders bet that additional money-printing from EU will push asset prices higher.

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WTI Oil Breaks Above The Resistance At $41.50

WTI oil spent many trading sessions in a tight range, and the EU deal served as a positive catalyst that allowed it to get above the nearest resistance at $41.50.

Now that the EU deal has been negotiated, oil has good chances to develop upside momentum and get closer to the next resistance level at $44. Such a move will provide material support to oil-related stocks and push S&P 500 higher.

Recently, oil majors like Exxon Mobil, Chevron, BP, Royal Dutch Shell have underperformed the S&P 500. As oil has finally managed to get above the key resistance level, these stocks will likely see increased interest.

Gold And Silver Break To New Highs

Gold and silver mining stocks will also be in spotlight today as both precious metals continued to rally. The upside move is especially significant for silver which has reached levels last seen in 2016.

The main catalyst is the same – the EU deal, which will lead to additional money-printing. In the environment where governments can’t stop printing money, investors bet on precious metals as a store of value.

In the developed world, near-zero interest rates will stay for some years to come, so precious metals will remain an attractive investment option for the foreseable future.

For a look at all of today’s economic events, check out our economic calendar.

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