October 5, 2020

Dow Jones Moves Higher

Dow Jones Moves Higher

The U.S. futures are trading higher, and traders are picking up on the positive momentum. There is no doubt that the primary focus among investors and traders this week is going to be on Donald Trump’s health. Any news about the improvement of his health is likely to bring relief to the markets. That is because it eliminates the uncertainty around the U.S. elections as speculators believe that if Trump does recover in time, there is a possibility of a delay in the U.S. presidential election. Over the weekend, the headlines have indicated that Trump’s health has improved; if it continues like this, then we should see some further tweets from the president.

Week Ahead 

As for the week ahead, investors will also be looking for positive news on the second stimulus package. Last week, Nancy Pelosi, the House Speaker, asked airlines not to furlough their employees as more support is imminent. We saw some serious gains for U.S. airlines, such as American Airlines and United. The U.S. airline sector is likely to remain highly volatile this week.If the second stimulus aid package becomes a reality, we will not only see the airline stocks skyrocketing, but the U.S. stock market will also rise.   

U.S. Economic Data 

The U.S. economic data on Friday has confirmed that the economic conditions are deteriorating, as the U.S. Non-Farm Payroll report was much weaker than the market expected. The U.S. economy created only 661K jobs last month, which was substantially lower than the previous reading. The reading for the previous month was 1.37 million. In addition to this, we also saw weakness creeping into the average hourly earnings growth; it slowed to 0.1% from 0.3%. However, there was a silver lining in this data, and that was in the U.S. unemployment rate, which dropped further to 7.9%, from the previous reading of 8.4%. The forecast for the unemployment rate was 8.2%.

Forex 

In terms of currencies, we saw the dollar index losing more momentum on Friday. The dollar fell against all the major forex pairs, such as the Euro-dollar and the Sterling-dollar. However, the upward trend for the Euro-dollar pair reversed its direction fairly rapidly, and it seems like the 1.1759 remains a major resistance for the pair.

Coronavirus Lockdown 

 Overall, the regional lockdowns remain a concern for the global equity market. On Friday, we saw a lockdown in Madrid. New restrictive measures are also likely to take place in Paris. The governments in these countries are trying to circuit-break the surge in the coronavirus. But all of this is coming at a massive cost as the capacity for restaurants, shops and gyms and other public places are reduced. Paris could see a complete closure of restaurants and bars as the city is already at the maximum Covid-19 alert, and if such a situation does take place, it means more economic pain for the French economy.