Optimism on Recovery, or doubt ahead of FOM meeting!

European markets in new records. 

Market analyst – IFC Markets

While the G20 meeting still did not have any clear result unless 15% tax agreement on International companies, which still has no executive guarantee, stock markets seem to be positive still, but doubts are all across the market. 

After two crazy weeks in the earnings front, this environment moved to this new week as well. Ahead of Cash markets, the futures market in Wall Street increased higher as this positive sentiment also sent European markets to a new record. 

In Asia also, despite the Chinese market which still suffering from real estate companies, other markers closed higher and this positive sentiment is spreading in other markets. 

Japanese Nikkei and other indices increased higher today, as Liberal Democratic Party, led by Prime Minister Fumio Kishida, won the election. He promised new rounds of stimulus packages that can be so handy for Japanese manufacturing and different industries to avoid the negative sentiment of the latest weakness in the trade data.  

And now, US markets seem to be still positive as investors believe that the market can grow higher with upcoming earnings and huge economic data. However, the FOMC two-day meeting will finish on Wednesday and its results still can limit the gains. 

As of writing, the Dow and Sp 500 Futures were up by 0.4%, and Nasdaq 100 Futures climbed 0.3%. These main indices, closed at a record high on Friday as the Last Trading Day of October to record a monthly gain of 5.8% for the Dow Jones Industrial Average, 6.9% increase in S&P 500 chart, and 7.3% gain for the technology-focused Nasdaq Composite. 

Knowing all these, still, eyes will be on the FOMC meeting on Tuesday and Wednesday. Even though if markets are already priced in tapering, now we have to questions that this meeting should have to answer for that, first the amount of tapering, and second which is kind of more important, when the central bank will increase interest rates? 

From the technical point of view, 4,575 is the key support of SP 500 in the short term, and breaching under that can put the asset under pressure. Technical indicators in all main charts, still remain bullish. However, for this week, the FOMC meeting effect will have more priority than technical charts. 


Related post