Opening Bell: Futures, Stocks Up On Renewed U.S. Fiscal Aid Optimism

Opening Bell: Futures, Stocks Up On Renewed U.S. Fiscal Aid Optimism  | Oct 08, 2020 12:22

  • Presidential tweets have been sending markets into disarray, and we expect more of that as election looms
  • Tech investors brush off severe Congressional antitrust proposals, boosting the four biggest tech companies

Key Events

US futures, including the Dow, S&P, NASDAQ and Russell 2000 and European stocks tracked most Asian shares higher, extending a rally that is pricing in a stimulus deal.

Late Tuesday, President Trump tweeted his approval for a piecemeal package of small economic aid measures though nothing concrete has yet been agreed to. As well, even if that’s delayed, the new, emerging narrative buoying equities is that if Joe Biden takes the White House in November, and Democrats become the majority in both the Senate and the House, the path will be clear for a massive new stimulus package.  

However, stimulus optimism continues to dent the dollar.

Global Financial Affairs

On Thursday, contracts on the S&P 500 built on Wednesday’s surge to a six-week high during the New York session, while European indices, including the Stoxx 600, climbed to monthly highs on the optimism, as well as positive corporate updates. The Stoxx 600 was boosted by travel and leisure stocks—two of the industries most impacted by the coronavirus. 

Stoxx 600 Daily

From a technical perspective the pan-European gauge crossed over the 200 DMA, though is till within a rising flag bearish after the benchmark topped out. The index is currently retesting that top.

Earlier Thursday, Asian stocks followed Wall Street's lead.  Hong Kong’s Hang Seng (-0.2%) was the only regional index in the red. Australia's ASX 200 (+1.1%) outperformed.

Yesterday, all eleven sectors of the S&P 500 were up, driving the index to higher by 1.75%. Even the technology sector staged a comeback as traders seemed to shrug off, at least for now, a House panel’s proposal for the biggest antitrust overhaul in fifty years, in an effort to rein in alleged abuses by meg cap tech behemoths Alphabet (NASDAQ:GOOGL), Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL). The big four, which account for more than 15% of the S&P 500, drove much of yesterday’s rally.

Eli Lilly (NYSE:LLY) gained on its antibody drug progress, and Regeneron Pharmaceuticals (NASDAQ:REGN) jumped after hours when President Trump credited its experimental, dual-antibody cocktail for his recovery.

Wednesday was a case in point of how volatile markets are becoming. Plus, this could likely continue until after the Nov. 3 US elections.

Yields, including for the 10-year Treasury note, struggled between the 200 DMA and the highs of Aug. 28, to determine the trend.

10-year Treasuries Daily

It seems bond traders are also waiting for a resolution on stimulus, which is expected to depress bonds, allowing yields to hover high—if they pass.

The Dollar Index fell on Wednesday, giving up gains as newfound optimism for a stimulus, which anticipates more dollars in the system, would reduce the value of each unit fundamentally and increasing supply technically. 

Fundamentally, the dollar is struggling on the constantly shifting news cycle regarding the fiscal package.

Dollar Index Daily

Technically, the greenback is fluctuating between the short-term uptrend, manifested by the bottom forming a rising channel and aided by the 50 DMA, and the medium-term, framed by the falling channel since the March high. 

Gold climbed on dollar weakness.

Gold Daily

Technically, it continues to wander between potentially conflicting fundamental themes, projected within conflicting technical patterns. The yellow metal may have completed a rising flag, bearish after completing a bearish symmetrical triangle. However, a move above $1,950 would flip market dynamics in the form of a completed bullish, falling wedge.

Bitcoin is being squeezed between the 50 and 100 DMA, forming a symmetrical triangle.

Bitcoin Daily

The digital currency is bearish after a H&S top pushed it below its uptrend line since the March bottom.

Oil rose for the second day, moving back above the $40 mark, boosted by the weaker dollar. It's been trading within a range for the past four months as traders look for additional fundamental signals regarding what might drive the price next

The imminent arrival of Hurricane Delta is threatening Gulf output, offsetting inventories, which increased by 501,000 barrels last week.

Oil Daily

Technically, oil is being squeezed between the 50 and 100 DMAs as it attempts a second upside breakout to what should have been a bearish symmetrical triangle after the bearish rising wedge. Notice how the 50 DMA went from being the wedge’s support to the triangle’s resistance.

Up Ahead

Market Moves



  • The Dollar Index decreased by less than 0.1% to 93.56
  • The euro rose 0.1% to $1.1773.
  • The British pound increased 0.2% to $1.2949.
  • The Japanese yen was unchanged at 105.98 per dollar.


  • The yield on 10-year Treasuries dipped two basis points to 0.77%.
  • The yield on two-year Treasuries gained less than one basis point to 0.15%.
  • Germany’s 10-Year yield rose one basis point to -0.50%.
  • Britain’s 10-year yield climbed one basis point to 0.3%.


  • West Texas Intermediate crude increased 0.6% to $40.30 a barrel.
  • Gold strengthened 0.3% to $1,893.20 an ounce.
  • LME copper declined 0.2% to $6,645 per metric ton.

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