Markets awaits political cues, Italy delivers – Market Overview

Markets awaits political cues, Italy delivers – Market Overview

Italian prime minister resigns over pandemic mismanagement.

Market risk sentiment worsens slightly today amid uncertainty about the viability of President Biden's promised $1.9 trillion fiscal stimulus package that still needs to go through the congressional approval process and could be delayed or blocked by Republican senators.

Although the North American economic figures have shown a favorable evolution in recent months, it is still pending to know the effects of the recent worsening of contagion cases on the economy, especially on consumption.

And in this sense, fiscal stimulus constitutes a determining factor in guaranteeing a smooth evolution.

FED Meeting

This week's Federal Reserve meeting will also play a role. Powell is expected to maintain his accommodative policy and commit to doing whatever it takes to support the economy.

In recent weeks there was talk in the market that the Fed could suggest its intention to reduce its asset purchase program given the possibility that the pandemic's evolution was improving and therefore that the economy would recover at a better pace.

But this possibility seems to have been ruled out and a current ultra-expansionary monetary policy for an extended period is the most widespread opinion among market participants.

As a result, purchases of US Treasury bonds return, and with it, the yield of the Tnote falls to the 1.04% zone from the 1.18% reached just two weeks ago.

This movement is typical of a market with a greater aversion to risk, mainly motivated by the worrying increase in contagion at a global level, measures to restrict mobility, especially in Europe, and the lack of short-term expectations of new stimulus measures both in fiscal and monetary level.

Global indices

Stock markets behave unevenly in Europe and the United States. Some indices' upward rallies are motivated by earnings releases from companies in some cases better than expected, especially in the banking sector and some technological ones.

Still, they are short-term rises that have not been able to resume a trend for the time being.

The US Dollar strengthens against all its counterparts due to the market's return to risk-off mode, acting in this case as a safe-haven currency. The upward effect on the US currency that the increases in Treasury bond yields had recently has disappeared to give way to a Dollar that is also strengthening but for reasons linked to market risk sentiment.

EUR/USD continues its slow downward path and the pivot level that constitutes the 100-hour SMA line has already broken down, having traded at levels close to 1.2100 during the start of the European session.

Now the primary support is still located at the 1.2065 area. The Italian political crisis with the resignation of Prime Minister Conte has contributed to the downward movement that the pair has experienced in the last day.

Sources: Investing.com, Reuters.

Die hier präsentierten Informationen wurden von Miguel A. Rodriguez erstellt und sind nicht als Investitionsberatung gedacht. Die hierin enthaltenen Informationen werden als allgemeine Marketingmitteilung nur zu Informationszwecken bereitgestellt. Als solche wurden sie nicht in Verbindung mit gesetzlichen Bestimmungen zur Förderung der Unabhängigkeit des Investment Research erstellt. Sie unterliegen nicht dem Verbot, vor der Verbreitung eines Investment Research gehandelt zu werden.

Die Benutzer / Die Leser sollten sich nicht nur auf die hier präsentierten Informationen verlassen und sollten ihre eigene Forschung / Analyse durchführen, indem sie auch die eigentliche zugrunde liegende Forschung lesen.

Key Way Investments Ltd hat keinen Einfluss auf die Formulierung der hierhin enthaltenen Informationen.Der Inhalt ist dabei generisch und wird nicht die individuelle persönliche Umstände,Anlageerfahrungen oder die aktuelle finanzielle Situationen berücksichtigten.

Daher übernimmt Key Way Investments Ltd keine Haftung für Verluste von Händlern aufgrund der Verwendung und des Inhalts der hierin enthaltenen Informationen. Die Wertentwicklung der Vergangenheit ist kein verlässlicher Indikator für zukünftige Ergebnisse.