S&P 500 Index To Track Progress On US Stimulus Ahead Of Deadline

S&P 500 INDEX, US FISCAL AID TALKS, US PRESIDENTIAL ELECTIONS, CORONAVIRUS – TALKING POINTS:

  • Equity markets climbed higher during the Asian trading session as investors digested the progress in US fiscal aid talks.
  • House Speaker Pelosi’s 48-hour deadline on bipartisan negotiations threatens to trigger a period of risk aversion.
  • S&P 500 index poised to move higher as price carves out a Bull Flag continuation pattern.

ASIA-PACIFIC RECAP

Equity markets moved broadly higher during Asia-Pacific trade, with Australia’s ASX 200 index climbing 0.85% and Japan’s Nikkei 225 index climbing over 1.2%.

Mixed economic data out of China took some of the wind out of the sails of the cyclically-sensitive Australian Dollar, as it retreated from session-highs after the announcement.

Gold clamber back above the $1,900/oz mark and silver stormed 1.7% higher, as the haven-associated US Dollar slid lower.

Looking ahead, speeches from European Central Bank President Christine Lagarde and Federal Reserve Chair Jerome Powell headline the economic docket.

S&P 500 Index to Track Progress on US Stimulus Ahead of Deadline

Market reaction chart created using TradingView

48-HOUR DEADLINE ON STIMULUS TALKS COULD HAUNT US BENCHMARK INDICES

The ongoing battle between Republicans and Democrats on the specifics of a much-needed, and long overdue, fiscal aid package is likely to dictate the near-term outlook for US benchmark equity indices, as House Speaker Nancy Pelosi announces that she and Treasury Secretary Steven Mnuchin must reach an agreement within 48 hours “if we want to get it done before the election, which we do”.

Given that the US is currently averaging more than 50,000 new coronavirus infections a day and initial jobless claims rose by 898,000 (est. 825,000) in the week ended October 10, the need for additional fiscal support is becoming increasingly urgent.

Moreover, Federal Reserve Chairman Jerome Powell warned that the absence of “an additional pandemic-related fiscal package” could see growth “decelerate at a faster-than-expected pace in the fourth quarter”, while his Vice Chair Richard Clarida also stressed the need for “additional support from fiscal policy” given that “it will take some time to return to the levels of economic activity and employment that prevailed at the business cycle peak in February”.

1 2 3 4
View single page >> |

Disclosure: See the full disclosure for DailyFX here.

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.