3 Things You Need to Know About the Market Today

1, US Stocks Surge Despite Mixed Earnings as Fed Completes Monetary U-Turn

Dow 30 Futures, 4-Hour Chart Analysis

The aftermath of the Fed’s scheduled monetary meeting and the earnings season, which is in full gear right now, have been in the center of attention today and although the US market had a euphoric ending to yesterday’s session, the global picture is far from rosy. The Central Bank not just confirmed the pause in rate hikes, but it also endorsed the possible early end to its quantitative tightening program in a separate statement, completely reversing the ‘overheating’ economy, ‘autopilot’ tightening schedule narrative from December.

The Fed managed to surprise the market that already priced in a significant dovish shift, and on the subsequent press conference Chairman Jerome Powell even admitted that the committee doesn’t want market disturbances, while saying that they still don’t think that quantitative easing/tightening has direct economic effects.

Investors didn’t mind the contradicting and slightly comedic statements, and the major indices spiked to new, marginal new correction highs and extended their gains following Facebook (FB) positive earnings report in after-hours trading, even as Microsoft (MSFT) slightly disappointed with its numbers. The main global indices didn’t follow Wall Street’s lead today, and the momentum in US stocks is also suspicious, but with all eyes on Amazon’s (AMZN) quarterly report, due to be released today after hours, bulls could successfully defend the break-out ahead of tomorrow’s crazy schedule, even in the face of the strong global headwinds.

2, US-Chinese Trade Talks Continue as Dollar Dumps2, US-Chinese Trade Talks Continue as Dollar Dumps

EUR/USD, 4-Hour Chart Analysis

The Dollar got hit hard following the Fed’s shocker, but today, the Eurozone provided another batch of lackluster economic releases, and the advance in the EUR/USD pair got halted by the 1.15 level, despite the sizable drop in Treasury yields across the yield curve.

The US-Chinese trade talks which resumed with a round of negotiations in the US this week, will continue with a meeting between President Trump and Chinese Vice Ziu, and although the President made it clear that a final agreement won’t be signed before his coming meeting with Chinese President Xi, investors are hoping for some major announcements already this week.

The recent developments in the case of Huawei could cast a shadow on this week’s talks but for now, the hopes of a successful meeting are also fueling the mature risk rally, while putting pressure on the Greenback. While the long-term trend remains clearly bearish in the EUR/USD pair the coming two days could see further wild swings in both directions, and after a break-below 1.13 has been avoided thanks to the Fed, the immediate outlook is rather neutral again.

3, Gold Hits 8-Month High ahead of Data Frenzy

Gold Futures, 4-Hour Chart Analysis

The biggest beneficiary of the dovish shift by the global central banks is not surprisingly gold, as the precious metal, which is in a healthy uptrend, has a lot of fundamental catalysts to capitalize on. The slowing global growth, the sky high debt levels, and now, the looming end of the Fed’s tightening cycle, all should boost the metal from a long-term perspective.

While the Fed-fueled relief rally in risk assets could still have legs, the bearish shift in global risk assets is still intact, and only the promise of an easier Fed won’t be enough to change that. We still expect another leg lower in equities across the globe and that could propel gold up to its next major resistance level near $1360 in the coming weeks, with a weaker zone found near $1325, right at the current price level.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.