Equity bulls in Europe were back in action on Wednesday as strong earnings from the region countered concerns over rising Covid-19 infections in Asia.

The Euro STOXX 50 index has gained almost 1% today, while the DAX is up more than 0.4% and CAC 40 more than 0.70%.

U.S stock markets opened lower with the Nasdaq becoming the weakest link after Netflix kicked of FAANG earnings season with a disappointing report. However, the S&P 500 later clawed most of yesterday’s losses as investors redirected their attention towards earnings.

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The next few days could be wild for equity markets as the risk pendulum swings back and forth. Investors are likely to remain on edge after the World Health Organization (WHO) warned that Covid-19 infections have now risen at a disturbing pace for eight consecutive weeks. But robust earnings and encouraging economic data from major economies could rekindle risk appetite.

Dollar Index remains under pressure

The Dollar has weakened against most G10 currencies today, falling 1% against the Canadian Dollar.

After staging a minor rebound during yesterday’s session, it looks like the downtrend is set to resume with a breakdown below 90.83 on the cards. Such a scenario may open a path towards 90.20 and 90.00, respectively.

Commodity spotlight – Gold

Gold extended gains on Wednesday, venturing to levels to not seen in over seven weeks above $1795. The commodity has gained over 0.8% today and is up roughly 5% month-to-date.

A growing sense of unease over the surging Covid-19 cases in Asia has hit risk sentiment and left investors on edge. With concerns likely to rise over how this may impact the world’s economic rebound from the pandemic, Gold has the potential to push higher as risk-off makes a return. Dollar weakness could inspire bulls to elevate prices higher over the next few days with $1800 acting as the first level of interest.

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