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Opening Bell: Dovish Fed Boosts U.S. Futures, Europe Stocks; Gold, USD Steady

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewAug 30, 2021 12:13
uk.investing.com/analysis/opening-bell-dovish-fed-boosts-us-futures-europe-stocks-gold-usd-steady-200495074
Opening Bell: Dovish Fed Boosts U.S. Futures, Europe Stocks; Gold, USD Steady
By Investing.com (Pinchas Cohen/Investing.com)   |  Aug 30, 2021 12:13
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  • Slight increase in Treasury demand steadies yields
  • Bitcoin traded lower again
  • Oil pares gains as rigs escape Hurricane Ida

Key Events

US contracts on the Dow, S&P, NASDAQ and Russell 2000 as well as European equities edged higher on Monday, following Friday's comments from Federal Reserve Chair Jerome Powell which suggested accommodation will not be pulled out from under investors’ feet.

The dollar and gold were little changed.

Global Financial Affairs

The Fed boss said that the US central bank could start paring bond purchases this year, but provided no timeline, adding that there is no rush to raise rates. It seems the plan is to revert back to the wait-and-see approach as he continues to watch employment and COVID-19 data.

All four US futures were slightly in the green after Friday’s records for the S&P 500 and NASDAQ indices. 

Meanwhile, European stocks this morning were moving towards their Aug. 13 all-time high on optimism that the ECB will continue supporting prices, as the that central bank acts to assist the recovery disrupted by the resurgance of the Delta variant of the pandemic. UK markets were closed for a bank holiday. 

The STOXX 600 Index was set to move more than 2% higher in its seventh month of gains, making it the longest winning streak for the benchmark in more than eight years.

STOXX 600 Daily
STOXX 600 Daily

The pan-European benchmark may have completed a pennant, bullish not only following a sharp advance, but one that broke through a resistance. The pennant’s lows retested that broken resistance and confirmed its newfound support.

In Asia, markets also rallied in their first session since Powell spoke. The MSCI’s broadest index of Asia Pacific excluding Japan rose almost 0.5%. South Korea’s KOSPI climbed for the second day, jumping 0.33% and China’s Shanghai Composite rose slightly, while the country’s blue chips listed on the CSI 300 slipped ahead of the purchasing manager survey for manufacturing and services which will show whether slowing growth has turned into a trend. The country’s tech companies extended their best weekly gains since January on sharp dip-buying amid a regulatory crackdown.

Yields on the 10-year Treasury note held at 1.3% after falling on Friday, when investors realized the current Treasury rates are as good as they're going to get.

10-year Treasuries Daily
10-year Treasuries Daily

Yields found support by the 50 DMA for the second day after falling away from the potential neckline of a bottom, during which time a Death Cross was triggered.

The dollar was flat, having found support above the 50 DMA.

Dollar Index Daily
Dollar Index Daily

The greenback fell Friday as disappointed traders unwound positions after Powell's speech. Recently, the dollar briefly completed a massive double-bottom, while right now it’s threatening to complete a small H&S top.

Gold also wavered, but it went through the opposite path of the dollar, by which it’s priced.

Gold Daily
Gold Daily

The yellow metal gave up an advance, potentially forming a doji, after having apparently broken free of a falling channel. 

Bitcoin edged down for the third day.

Bitcoin Daily
Bitcoin Daily

The cryptocurrency may be developing the second consecutive continuation pattern with a rising channel and could be on course for a new high in September.

Oil gave up an advance and even turned into a decline, as rigs appeared to have been spared major damage from Hurricane Ida and OPEC+ is expected to endorse increasing supply this week.

Oil Daily
Oil Daily

The price slipped back below the 100 DMA, resuming its path along the falling channel.

Up Ahead

Market Moves

Stocks

  • The STOXX 600 was little changed
  • Futures on the S&P 500 were little changed
  • Futures on the NASDAQ 100 were little changed
  • Futures on the Dow Jones Industrial Average were little changed
  • The MSCI Asia Pacific Index rose 0.8%
  • The MSCI Emerging Markets Index rose 0.7%

Currencies

  • The Dollar Index was little changed
  • The euro was little changed at $1.1796
  • The Japanese yen was little changed at 109.83 per dollar
  • The offshore yuan was little changed at 6.4674 per dollar
  • The British pound was little changed at $1.3753

Bonds

  • The yield on 10-year Treasuries declined one basis point to 1.30%
  • Germany’s 10-year yield advanced one basis point to -0.41%
  • Britain’s 10-year yield declined two basis points to 0.58%

Commodities

Opening Bell: Dovish Fed Boosts U.S. Futures, Europe Stocks; Gold, USD Steady
 

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Opening Bell: Dovish Fed Boosts U.S. Futures, Europe Stocks; Gold, USD Steady

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