US open: Stocks to record highs as the Fed starts to taper
Fiona Cincotta November 4, 2021 9:44 PM
An accommodative Fed lifts stocks. Jobless claims fall to fresh pandemic low.
Dow futures -0.01% at 36145
S&P futures +0.14% at 4660
Nasdaq futures +0.35% at 16192
FTSE +0.53% at 7280
Dax +0.52% at 16031
Euro Stoxx +0.44% at 4328This content will only appear on City Index websites!
The Fed tapers without a tantrum
Continued accommodation from the Fed is like Christmas came early for the markets. The prospect of cheap money for longer as the Fed pushed back on interest rate hikes boosts stocks to fresh all-time highs.
As expected, the Fed announce the start of its tapering by $15 billion per month. However, the forward-looking market is already past that decision, instead focusing on what Powell had to say over inflation expectations and prospects of a rate hike.
Powell was clear that he won’t consider a rate hike until further recovery is seen in the US labour market, even though inflation could remain elevated for months. Employment is the Fed’s greater concern right now.
The meeting is being reflected in different ways in the stock market and the FX market. Whilst the USD dropped sharply post meeting it has rebounded firmly today. As the dust settles perhaps the Fed doesn’t seem that dovish compared to its peers, particularly in light of the BoE shock 7-2 vote. Meanwhile US stocks advanced yesterday and are set to extend those gains today thanks to the accommodative Fed.
Jobs will be back in focus ahead of tomorrows NFP. Jobless claims fell to a fresh post pandemic low of 269k, besting forecasts whilst labour unit costs surge.
Where next for S&P 500?
The S&P continues to charge high with the futures reach a fresh all time high. It trades within a steep 3 week ascending channel. The RSI is in overbought territory so some consolidation or easing back in the share is expected. The price is also a good distance from the 50 sma. It would take a move below 4550 to negate the near term up trend.This image will only appear on cityindex websites!
FX – USD rebounds GBP tanks as BoE stays pat
After an initial selloff following the Fed meeting US Dollar is rallying, recovering yesterday’s losses and more. The USD had concentrated on the Fed pushing back on a rate hike yesterday. However, today is a new day and the greenback is rising as the Fed doesn't look so dovish next to its major central bank peers.
GBP/USD is diving lower after the BoE voted 7-2 to keep interest unchanged. The market had expected the BoE to hike rates or at least for the vote to be significantly closer. Investors await the press conference shortly but it would appear that the market had gotten well ahead of itself.This content will only appear on City Index websites!
GBP/USD -0.85% at 1.3566
EUR/USD -0.48% at 1.1556
Oil rises ahead of OPEC+ meeting
Oil prices are rebounding more than 2% amid expectations that OPEC+ will stick to steady output increases despite call from leaders for further supply. OPEC+ appears to want to remain behind the demand curve for now and are hesitant about ramping up output.
So why aren’t OPEC going to increase output? There are growing concerns not just from OPEC but also IEA and EIA that supply will exceed demand next year if output is ramped up now. The organisations believe that the deepest oil draws are behind us a theory which is supported by recent stockpile data. There are real concerns that the current demand deficit turns into surplus next year.
WTI crude trades +1.85% at $81.63
Brent trades 2% at $83.36This content will only appear on City Index websites!
This content will only appear on City Index websites!
How to trade with City Index
Follow these easy steps to start trading with City Index today:
- Open a City Index account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels
- Place the trade.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.