ZFX: Short covering under risk off sentiment

Last Friday, the three major Wall Street indexes bounced back by more than 1%, of which the Dow closed nearly 2% higher, after experiencing a sharp decline on Thursday. Stocks in Asian region were little changed in Monday morning session.

Some investors believed that the markets were over-adjusted so that released buying interest at the low.

However, investors are also monitoring the risk of second wave global outbreak. Risk aversion returned due to the recent spikes in coronavirus confirmed cases. The safe-haven assets like gold, dollar and US Treasury remained strong on Monday Asian session.

Last Friday, The Fed report to Congress showed that the pandemic and economic outlook are still very uncertain. The risk of the US and the global economy maintained at the high level. The Fed will use all tools to get the economy out of recession. The pessimistic views from Fed to a certain extent prompted investors to seek the safe-haven.

ZFX analyst Jacob Leung said that, it may be just short covering last Friday. The strengthening of dollar reflects the bearish sign of the markets this week, continuing the reversal move. Investors will be very cautious to weigh the potential impact as the second wave of coronavirus outbreak may even cause greater damage to the global economy.

Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.