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Markets awaits political cues, Italy delivers – Market Overview

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 Noiembrie 2022
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.

Informațiile prezentate în acest document sunt pregătite de CAPEX.com/ro și nu au intentia de a constitui consultanță pentru investiții. Informațiile din acest document sunt furnizate drept o comunicare generală de marketing cu scop informativ și, ca atare, nu au fost pregătite în conformitate cu cerințele legale concepute pentru a promova independența cercetării în domeniul investițiilor și nu sunt supuse niciunei interdicții de abordare înainte de diseminarea cercetărilor legate de investiții.Utilizatorii/cititorii nu ar trebui să se bazeze exclusiv pe informațiile prezentate aici și ar trebui să facă propriile lor cercetări/analize, prin citirea cercetărilor de bază. Conținutul acestui document este generic și nu ia în considerare circumstanțele personale ale fiecărui individ, experiența de investiții sau situația financiară actuală.Prin urmare, Key Way Investments Ltd nu va accepta nicio responsabilitate pentru eventualele pierderi ale traderilor datorate utilizării conținutului sau a conținutului informațiilor prezentate în acest document. Performanțele trecute și previziunile nu sunt indicatori fiabili ai rezultatelor viitoare.
 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Autor financiar

Miguel a lucrat pentru instituții financiare importante, precum Banco Santander și Banco Central-Hispano. De asemenea, a publicat cărți despre Forex.
 

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