A positive start to the week for global equities reflected a strong finish on Wall Street on Friday and an unwillingness to get bogged down by record global daily case numbers. A surge in the futures overnight translated into +1% gains for European cash equity markets as they opened, although the immediate move was to retreat off the highs made by the futures.

Whilst indices have chopped around the Jun-Jul ranges, there are divergences in the performance: the DAX is close to its June high, the FTSE 100 has only retraced 38.2%. Meanwhile futures show the S&P 500 is set to open at 3200, just 40 points from its post-March highs, whilst the Dow has only retraced 50%. These discrepancies reflect index composition as much as anything else – what to watch out for this week will be whether the S&P 500 or the DAX break free or move back towards the middle of their ranges.

The WHO said over 230k new cases were recorded in 24hrs, a record. The US recorded over 70k cases but increasingly investors are shrugging off these headlines as it’s felt the country won’t lockdown in the same way again. Nevertheless, the spike in Covid cases has slowed reopening in several states and this could translate into negative rate of change in some of the economic data which could be a problem for bulls.

It’s a big week for data, not least the start of the Q2 earnings season on Wall Street. The high frequency economic data should continue to point to recovery however it will be the rate of change that matters more – is the recovery gaining momentum or are the easy wins behind us?

Tesla stock surged another 10% on Friday to rise above $1,500. The company is likely to report a fourth straight quarterly profit on July 22^nd, which would clear the way for it to enter the S&P 500, and may explain the recent rally as funds have decided they will need to own some of it.

In commodities, gold continues to consolidate on the $1,800 level and with the bullish flag in play it could retrace further before the near-term pullback is complete, with the longer-term support on the trend line coming in around $1788. Speculative net long positioning rose, whilst inflows into gold funds continue to surge.

Crude oil continues to battle with the trend line as it tries to recover the bullish bias after last week’s sharp sell-off. Coming up this week is the U.S. Energy Information Administration (EIA) drilling report (Jul 13^th) and OPEC monthly oil market report (July 14^th). Speculative net positioning has barely changed in the last week, according to the CFTC COT report, with net longs at 535k vs 543k the prior week.

In FX, the dollar bounced a little of its lows in early trade with the dollar index making a bottom at 96.35 and pushing back up to 96.50. Sentiment for the dollar is a bit softer due to the risk-on trade, which is lifting major peers to drift higher. GBPUSD may have made a near-term top around 1.2670 but remains supported by the bullish channel.