GENEVA — US stock indices paused a five-day rally in New York, dragged lower by financial, industrial and energy shares. US treasuries and gold gained. Worries about the rising number of new COVID-19 cases, prospects of a bumpy and slow post-crisis recovery, topped by Donald Trump threatening China with more executive orders including new restrictions on imports were brought forward as the euphoria following the government-fueled rally in Shanghai fast faded. Good news was bypassed by investors. The US funding to support the development of a COVID-19 vaccine didn’t whet investors’ appetite in healthcare stocks. Meanwhile, the JOLTS data had little impact on the market mood despite printing nearly 5.4 million job openings in May, versus 4.8 million expected by analysts. Although we believe that the market has multiple reasons to value most share prices lower, the expectation of more monetary and fiscal stimulus tends to temper the headwinds. Recently, we couldn’t find solid bull-market drivers other than the additional stimulus hopes. But the markets moved higher with firm steps. While the rise in technology stocks were reasonable given the sharp increase in their online services demand, other share prices kept on rising as well despite their highly damaged underlying businesses. Hence, we are brought to believe that if the market is willing to carry the stock rally further, it will find a reason to do so. In this respect, the forthcoming $1 trillion US stimulus should better the mood and limit the downside correction in equity prices. Trading was mixed in Asia. US futures were flat to negative. The ASX 200 (-1.10%) slid, Nikkei (-0.61%) extended losses as yen appreciated. Shanghai’s Composite added another 0.77% on the remaining Monday optimism, and the Hang Seng (+0.14%) was little changed despite rumors that the US could undermine the HKD’s dollar peg to limit the Hong Kong banks’ ability to purchase US dollars as another sign of disapproval for the city’s new national security law. Activity in British and European futures hint at a bearish start on Wednesday. The US dollar index remains little changed near the 97 mark. The EURUSD retreated below 1.13 as the single currency encountered solid resistance into the 1.1350 mark over the past 48 hours. Still, the expectation that the 750-billion fiscal rescue package could finally be approved at Thursday’s Eurogroup meeting should spur some dip-buying interest near the 200-hour moving average (1.1250). The earlier opposition to the fiscal aid proposals from the ‘frugal four’ and uncertainty around a final agreement keep the suspense going, therefore good news on the fiscal deck are not fully priced in and could unlock the euro’s upside potential in the coming days. A negative surprise could however trigger a reaction sell-off. The key support to the actual positive trend stands at the critical 1.1160 Fibonacci level. Cable consolidates gains near the 1.2550 mark supported by the news that the EU is willing to make concessions on fishing policy, one of the sticking points preventing the parties from progressing on their EU divorce deal. But the medium-term outlook in sterling remains negative as an agreement on fishing rights won’t necessarily resolve separate issues as the London’s access to European financial markets after the EU exit and the Northern Ireland issue, although any material progress on one of the above stated points would increase the probability of a deal and support sterling in the short run. Today, Chancellor of the Exchequer Rishi Sunak will deliver a mini budget to sustain jobs and the economic recovery. On the menu, VAT and insurance cuts, vouchers, and stamp duty holiday to boost spending in multiple sectors and boost activity to tackle the COVID-induced economic slowdown in the UK. Despite a soaring government debt, any additional stimulus would temper the recession worries in Britain and have a positive impact on both the FTSE and sterling. In commodities, WTI crude sees fading appetite near the $40 per barrel as prospects of post-COVID recovery are being dashed by the rising number of new cases, as the API data hints at a surprise build in US oil inventories last week. The more official EIA data could confirm a weekly rise today. The combination of softening demand and abundant supply could trigger a downside correction in oil prices to $38/35 pb area. Finally, gold is flirting with $1,800 per oz on the back of souring market mood. Solid offers are eyed near and above this level. — The writer is senior analyst at Swissquote Bank