US stocks to open higher as markets await Powell


  • Equities recover after recent declines

  • Positive trade talk from China aides the recovery

  • Fed chair Powell to speak at 2:55PM (BST)


A topsy turvy session for US stock markets to start the week saw the S&P500 briefly dip to its lowest level in almost 3 months before recovering into the cash close. Equities began the week under pressure with a gap to the downside, but shrugged of a mildly disappointing ISM print before receiving a further boost with some dovish comments from Bullard. The voting member of the Fed said that rate cuts may be “warranted soon” in what is the strongest hint yet that the US central bank are considering easing policy in the not too distant future.

The S&P500 is back at its 200 day SMA after falling to its lowest level since March yesterday. Lows of 2729 a level to look for possible support, 2800 remains potentialy key resistance. Source: xStation


Given these remarks there’s an even greater level of expectancy when Fed chair Powell speaks in Chicago this afternoon, and any comments that err on the dovish side could provide a catalyst for a swift move higher in stocks. Ahead of this speech there’s been a more constructive tone to the latest talk on trade from China, with the commerce ministry stating that the dispute with the US should be solved through dialogue. There remains much to be done and a lot of bridges to be built before a serious de-escalation of the tensions between the world’s two largest economies can occur, but given the near constant negative rhetoric of late, it appears to not take too much to alleviate some of the doom and gloom and improve sentiment.     


The weakness seen yesterday was most keenly felt in tech shares with large declines seen in many of the FAANGs after news broke that US antitrust enforcers are stepping up investigations into Google, Facebook, Amazon and Apple in a move that wiped in excess of $133B of their market value. An agreement between the Department of Justice and the Federal Trade Commission has paved the way for antitrust investigations into the four companies, although the extent of the probe and how aggressive it will be are yet to be seen. Monday’s session saw the following moves for these companies:

  • Google: -7%

  • Facebook: -7.5%

  • Amazon: -4.6%

  • Apple: -1%


These four markets are included in our USFANG index which tumbled by 20% in the past month after surging to a gain of more than 40% from the December low to the April high. A 20% decline is widely seen as satisfying the definition of a bear market, and with high levels of uncertainty surrounding the depth and impact of this probe, there could well be further weakness ahead.

USFANG has now handed back the bulk of the gains seen year-to-date and is not too far from the 78.6% at 2217. Source: xStation  



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