European and US stock futures are trading almost flat on the first trading day of May. Traders believe that it is highly likely that the global stock market, especially the US stocks, could face some corrections as we have seen three consecutive months of gains. In addition to this, investors are concerned about the rise in coronavirus cases in India and how the situation is going to have a profound influence on the global economy.
On Friday, the Dow Jones Industrial Average fell by 0.54%, the S&P 500 declined by 0.72%, and the Nasdaq decreased by 0.85%. However, the S&P 500 is up over 11% for the year, and it rose over 5% during April. As for the Dow, it jumped higher by 2.7% in April while the Nasdaq soared by 5.4% during the last month.
The past three weeks have been incredibly busy for the US stock market as we have seen some blowout earnings from the US corporates. The US earnings season is going to continue this week as well. However, most of the important US banks and tech giants have already reported their earnings. Therefore, this week the focus among investors and traders is going to be on the important economic events.
The US NFP data is what matters the most this week, and investors will be looking at this data through the Fed’s lens. Remember, last week, the Federal Reserve mentioned in their FOMC minutes that the recovery in the US economy is still uneven, and the US economy still has a long way to go. This is despite the fact the US Jobless Claims data is at its pandemic low, and we are also seeing the US Continuing Claims data trending to the downside as well. The expectations are for the US NFP data to fall further. The forecast for the US unemployment number is to fall to 5.7% from its previous reading of 6.0%. If the number matches the forecast or comes even better than the forecast, we are likely to see a massive reaction not only in the dollar index but also in the stock market as investors will recalibrate their bets.
In the crypto market, it is all about Ethereum, which crossed the critical resistance of $3K today. This particular price move by Ethereum was long coming due to the massive interest among institutions. The amount of interest in Ethereum among institutions can only be measured by looking at the fact that we have Ethereum ETF listed on the Canadian stock exchange, which is mainly targeted to fulfill the needs of institutions.
The general consensus when it comes to Ethereum price action is that it is still massively undervalued as compared to Bitcoin. By looking at the strong demand among institutions and momentum in the price action, it may not be an exaggeration to say that ETH can easily achieve its medium-term price target of 5K, and from there onwards, it can begin its journey towards its long term target of 10K.
In the commodity space, we see oil prices ticking lower as investors continue to worry about the influence of the coronavirus situation on oil demand. There is no doubt that India plays a major role when thinking about oil demand, and the fact that the country is suffering from its worst coronavirus period is making investors nervous about oil prices.
As for the rest of the world, such as China, Europe, the Middle East, and the US, the coronavirus vaccination process continues to roll out, and we are seeing tremendous progress. This has prompted traders to be more optimistic about the future of oil prices who believe that the average price for Brent for this year could be near $65.
On the oil supply front, there is no doubt that oil supply is on the rise by the OPEC, and it had been increasing since June last month. In the US, we also see some strong numbers in terms of US rig, and they have also been increasing consistently as oil prices see recovery.