3 Things You Need to Know About the Market Today: Shutdown Deal?, Another Powell Speech, Gold Strength
1, Stocks Pop Higher on Tentative Shutdown Deal
Nasdaq 100 Futures, 4-Hour Chart Analysis
Following yesterday’s marginal gains, today, global stock markets are well in the green at the US open, as investor sentiment improved substantially. It seems that a second partial government shutdown might be avoided in the US, as the two parties agreed in the Congress on a tentative deal. On a negative note, the deal doesn’t include the funding for Trump’s controversial Wall, so the President could still block the agreement.
The continued rally in Chinese markets, which was fueled by the optimism regarding the trade talks between China and the US, is also helping global markets today, with the extension of the March 1 deal now being officially on the table just as we speculated during the weekend. Besides equities, risk assets are higher across the board, due in part to the Dollar’s dip, with especially crude oil being helped by the renewed trade optimism.
On Wall Street, the Nasdaq 100 index is facing stiff resistance near 7000, and given the still dominant bearish global trends and the recent lofty gains of the major US indices, a failure at that level could mean that the stock market is finally ready to roll over following last week’s trendline breaks.
2, Dollar Pulls Back as Traders Await Jerome Powell
Dollar Index, 4-Hour Chart Analysis
The Dollar Index (DXY) spiked above the key resistance zone near the 97 level following 8 positive days in a row today. Although the index pulled back somewhat thanks to the broad risk rally, the reserve currency could be in for a volatile US session, and it could even end up extending its winning streak should Fed Chair Jerome Powell pull a shocker yet again.
The central banker caused wild swings in both directions in stocks and across asset classes in the past couple of months, since after a series of rate hikes last year, now, the Federal Reserve is more likely to ease financial conditions, at least according to the market. Last week, Mr. Powell gave a surprisingly upbeat speech regarding the US economy, and this afternoon, he is scheduled to speak yet again.
While we expect a more cautious tone from the Chairman, the mature short-term rally in stocks together with this week’s positive sentiment could mean that there is not much upside left for risk assets, and especially ahead of the data dump in the second half of the week, traders will take some chips of the table following the speech.
3, Gold Defies Strong Dollar, New Highs Ahead?
Gold, 4-Hour Chart Analysis
While gold faced hostile short-term trends recently, with the Dollar and risk assets rallying almost hand-in-hand, the precious metal, one of the main financial safe havens remained firm. The metal entered an orderly consolidation pattern after topping the resistance zone near $1310, and now, it’s trying to confirm a short-term swing low, which could lead to a move towards the next main zone near $1360.
While even a deeper pullback would leave the uptrend intact in gold, and of course, gold is especially strong against the relatively weaker currencies, but the recent price movements suggest another leg higher even against the strong Greenback. Today’s session, and the rest of the week will be crucial for global risk assets, and should the bearish long-term trends kick in again, gold might be one of the main beneficiaries, as it was the case towards the end of 2018.
Major Stock Indices
S&P 500 Futures, 4-Hour Chart Analysis
Dow 30 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
EUR/USD, 4-Hour Chart Analysis
USD/JPY, 4-Hour Chart Analysis
GBP/USD, 4-Hour Chart Analysis
EUR/GBP, 4-Hour Chart Analysis
AUD/USD, 4-Hour Chart Analysis
WTI Crude Oil, 4-Hour Chart Analysis
Copper Futures, 4-Hour Chart Analysis
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