Can An Earthquake Shake The Markets? – ICoQuet
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Can an earthquake shake the markets?

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Can an earthquake shake the markets?

June 23, 2020, 22:18

An earthquake of 7.5 on the Richter scale brings the ghosts of the past back to Mexico and evokes memories of the earthquake of September 19, 2017, which left hundreds dead and damage that still reflects the terror suffered at that time.

Fortunately, this time, Mexico is much better prepared for these events and the damage is minor. There is one death in Huatulco, Oaxaca, that we must mourn.

So far, there have been 150 aftershocks and there is a fear of Tsunamis in El Salvador, Guatemala, and Honduras.

The tragedy overshadows an otherwise good day in terms of macroeconomic data.

The latest monthly PMI ( Purchasing Managers Index ) figures which we have seen from Germany (44.6 current vs 36.6 previous), the USA (49.6 current vs 39.8 previous) and the UK (50.1 current vs 40.7 previous) brings welcome support and stability for the equity markets.

The numbers mean that the UK is once again in a confident economic mood and Germany and the US are close to it, with a rate of recovery that has not been seen for many years.

Consumption is rising again and this is vital for the US and Germany, as in both cases it represents a large chunk of GDP. In the case of the United Kingdom, this is good news but matters less, as it a more international market (more than 60% of the income generated by the companies in the FTSE100 is generated outside the country), but any economic revival of other countries in the European Union and manufacturing growth in the United States, should benefit the UK economy enormously.

As for the effects of the earthquake, we will be very attentive to movements in the oil market, as this could generate a lot of volatility for an asset that was already approaching important levels of short-term resistance, where we continue to see a significant accumulation of downwards pressure. At the moment, it is difficult to break through levels, we will see in the short term what impact this inevitable disruption brings.

Monthly Gold Chart

Source: Admiral Markets MetaTrader 5. Gold Monthly chart. Data range: from Nov 11, 2019, to June 3rd, 2020. Prepared on June 23, 2020, at 9 pm. Please note that past performance does not guarantee future returns.

We will also have to watch for movements of the major metals – especially Gold, as it functions as a safe haven asset and should perform well in the short term. We currently see it at session highs and breaking previous highs and short term resistance.

 

INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analyses, estimates, prognosis, forecasts, market reviews, weekly outlooks, or other similar assessments or information (hereinafter “Analysis”) published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

2. Any investment decision is made by each client alone whereas Admiral Markets AS (Admiral Markets) shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.

3. With a view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for the prevention and management of conflicts of interest.

4. The Analysis is prepared by an independent analyst Juan Enrique Cadiñanos, Country Manager (hereinafter “Author”) based on personal estimations.

5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.

6. Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.

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