Positive Tone on Wall Street ahead of a Busy Week

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Market participants feel optimistic at the start of the week, with major indices in Europe rising and US stocks poised to open moderately higher and near record high territory.

US index futures

  • Dow futures + 0.0% at 35,891
  • S&P futures + 0.2% at 4713
  • Nasdaq 100 futures + 0.4% at 16,389

European indices

  • FTSE -0.1% at 7,282
  • DAX + 0.9% at 15,771
  • EURO STOXX + 0.7% at 4227

Global risk appetite signs up going to central bank goodwill

Market participants feel optimistic at the start of the week, with major indices in Europe rising and US stocks poised to open moderately higher and near record high territory, essentially eliminating the monthly fall due to fears over a more aggressive Fed. narrow and the Omicron variant. Even news that the first British patient had died with the Omicron variant and that the country was preparing for a “wave” of cases could not derail the feeling of bulls. U.S. Treasury yields are also lower, confirming the early strength in equity markets.

Looking ahead, the most prominent markets this week will come from central bank statements, with the most-watched meetings taking place through the middle of the week, including Fed monetary policy meetings on Wednesday, as well as the BOE and ECB on Thursday.

Check out my colleague Joe Perry’s preview report Week Ahead for an overview of this week’s major events!

Where next for the S&P 500?

The broadly followed U.S. broad-based index opens near record highs above 4,700, after a brief 4% retreat until the end of November. As any experienced trader will tell you, the trend is your friend when you trade using technical analysis, and in that vein, the path of least resistance remains on the upside for the S&P 500. If the index can confirm a close above 4,710 . and ideally 4,740 this week, it would increase the probability of a year-end above 4,800:

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Source: TradingView, StoneX

FX: USD rises in otherwise quiet trade

The world’s reserve currency is the strongest of the major leaders in a US session with a barren economic calendar. Following Friday’s relatively hot CPI report, most traders expect the Fed to accelerate its tightening program later this week, a key step on the path to rising interest rates in the first half of next year. This, in turn, could underscore the growing monetary policy divergence between the US and the Eurozone if the ECB suggests extending its asset purchases on Thursday.

  • EUR / USD -0.25% at 1.1287
  • GBP / USD -0.06% at 1.3259

Oil margins lower to start the week

Oil prices are down nearly -1% to start the week after seeing their biggest weekly gain since August last week due to declining fears of Omicron. Like most other major markets, oil is likely to take its cue from this week’s parade of central bank meetings before calming down as many traders leave their desks for the final two weeks of the year.

  • WTI crude trades -0.8% at $ 71.35
  • Brent is trading at -0.7% at $ 74.87

Looking ahead

17:30 GMT: BOE Governor Bailey talks about the UK Financial Stability Report in London

Source

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