Mid-Market Update: US data disappoints, EU virus surges, Oil volatile, Gold slumps

US stocks were initially weighed down after disappointing US labor data, but refused to break as the divorce bound relationship between the US and China appears to be showing early signs of stabilizing.  China has hinted hesitancy on striking back at US companies following the Huawei sanctions, which is good news for tech heavyweights.  The US was also upbeat on China’s commitment to delivering with their phase-one trade deal commitments. 

The love for technology stocks grew as the favorite pandemic plays, such as Apple and Tesla saw strong demand.  No one wants to short this market, so we are seeing investors just rotate back into technology stocks today.    

Jobless Claims/Philly Fed

Pressure is growing for Congress to get their act together after the first jobless claims report since the end of the paycheck protection program saw an unexpected strong rise with initial jobless claims.  The PPP stopped accepting applications on August 8th and undoubtedly put more strain on small businesses.  Since late March, over 57 million Americans have filed for unemployment benefits. 

Initial jobless claims rose by 135,000 to more than 1.1 million, worse than the consensus estimate of 963,000.  While continuing claims improved, the one-week lag will have investors anticipating next week’s reading will rise.  The Pandemic Emergency Unemployment Compensation is heavily being used and likely suggests the recovery has stalled.  With most of the jobs lost stemming from the service sector, the outlook will deteriorate heading to winter for the outdoor dining restaurants, travel and leisure jobs. 

The Philly Fed business outlook added to the cloud of uncertainty.  The second regional survey, following Empire manufacturing survey, showed strong declines with the outlook, new orders, and employment.  Both Philadelphia and New York are well beyond their respective virus peaks in April and the slowdown with the recent data is disheartening for the outlook for the rest of the country. 

EU Virus

European equities are getting hit hard as the coronavirus spread intensifies in Germany, Spain, and the UK.  Germany and Spain’s daily infection rate reached the highest levels since late April, while the UK infection rate rises by almost a third in one week. 

Europe’s economic recovery will stall until the virus is back under control.  The ECB’s September meeting will likely see policymakers moderate to a more dovish stance.  The euro was ready for a pullback and a deteriorating outlook will likely accelerate that. 


Crude prices went on a wild ride, plummeting after disappointing labor data in the US and surging virus data in Europe suggested the economic recovery is stalling.  Crude demand outlooks will likely need strong downgrades if both Washington DC fails to deliver adequate stimulus relief next month and if Europe struggles to contain the virus as holidaymakers return home. 

Oil prices did not get any favors after Saudi Arabia, the world’s largest oil exporter posted the worst decline in exports since 2002.  COVID-19 is stubbornly not going away, and this is starting to kill the global economic recovery, which will prevent oil-producing nations from ramping up production.

Despite all the bearish headlines on economic angst, Europe’s virus surge, and Saudi Arabia’s decline with crude exports, oil prices are only down slightly.  Energy traders appear to be confident that OPEC+ will not continue to taper production cuts if the demand outlook diminishes.  Rising tensions in the Middle East region along with peak hurricane season are wildcards that could provide some massive disruptions with crude output.  President Trump is maintaining a hard line against Iran again and the latest US energy agreements with Iraq will take away key revenue from Iran.  The US energy deal with Iraq is worth up to $8 billion, which will benefit Honeywell, Baker Hughes, GE, Stellar and Chevron.  A couple tropical depressions in the Caribbean appear poised strengthen and hit Florida and the Texas coastline. 

WTI crude also benefited from a positive incremental update with Pfizer and BioNTech favored COVID-19 vaccine which is initially showing few side effects than their first vaccine.  A successful vaccine is what is needed to help the fuel demand recovery for oil prices. 

Crude prices remain stuck in a range and that seems that will be the case for the rest of summer. 


Gold prices continue to consolidate as investors await to see if the weaker dollar trade will be abandoned for only a day or two.  This week, global growth risks have intensified in Europe and the US and that should keep demand relentless for bullion for the rest of the summer.  While we might see a tentative period of calm between the Americans and Chinese, election uncertainty and a deteriorating economic outlook in both the US and Europe will likely warrant greater fiscal and monetary stimulus in September.  Gold’s bullish trend might struggle to reassert itself in the immediate future, but investors have no worries that significantly higher prices are around the corner.  Gold’s longer-term outlook will benefit from falling supplies due to weaker mined production, never-ending pandemic concerns, geopolitical risks, and weaker US dollar. 

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.