DJIA eyes new highs as stocks absorb flurry of negative news
Fawad Razaqzada September 27, 2019 7:41 AM
The major US indices have been spending several days in consolidation near their recent highs. As they haven’t dropped more materially on the back of what should have been bearish news (e.g. Trump’s impeachment inquiry; weak macro pointers from Germany and US, and ongoing uncertainties over the US-China trade issue, Brexit and the Middle East situation et. al.) is not exactly bearish, is it? In other words, the markets have absorbed bad news through time than price action. What can’t break you makes you stronger. At the same time, several central bank members have come out in support of more monetary stimulus. Today, for example, the Bank of England’s Saunders said that it was “quite plausible” the next rate move will be down even if we avoid a no-deal Brexit. Those comments sent the FTSE sharply higher. Alongside the European market rally, US index futures have gained ground, suggesting Wall Street will open in the positive later. And given the recent trend of Fridays being rather bullish for the markets, I wouldn’t bet against a sharp rally for the US indices today. Obviously, the big assumption here is that we won’t hear any majorly bad news e.g. a surprise announcement by Trump that the planned US-China trade talks are off. That would be something, right!? But if there is no such news then we could see the markets drift higher into the close.
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