US open: Wall Street rallies as attention shifts to the Fed

Stocks on Wall Street look poised to rebound as fears over Evergrande contagion ease. Attention now shifts to the Fed which kicks off its two day meeting today.

USA (2)

US futures

Dow futures +0.7% at 334190

S&P futures +0.6% at 4384

Nasdaq futures +0.64% at 15110

In Europe

FTSE +1.1% at 6983

Dax +1.4% at 15351

Euro Stoxx +1.2% at 4093


Stock rebound

The mood in the market has picked up considerably since yesterday’s blood bath. Taking a step back expectations have cooled that Evergrande could be China’s Lehman’s moment. Wall Street considers that China has this under control allowing investors to turn their attention to the Fed, which kicks off its two-day FOMC meeting today.

The Fed will update with its quarterly economic forecasts and the dot plot. There is a good chance that if the Fed don’t start tapering, they will at the very least pave the path for a move in November. It is quite widely acknowledged now that the US economy doesn’t need this currently level of support from the Fed.

The US economic calendar is quiet today. Housing starts and building permits revealed that the US housing market was on a solid footing.

Where next for the Dow Jones?

The selloff in the previous session saw the Dow Jones break through some key levels. The index broke below its 100 sma at 34700 and horizontal support at 34500 hitting a low of 33930, a level last seen two months earlier. The index is rebounding today. Any meaningful recovery will need to reclaim 34500 and 34700. Buyers are only likely to gain traction above the 50 sma at 3500 which could pave the way to 35250. Sellers will be looking for a move below 33930 to 33730 the July low.

Dow Jones

FX – USD eases, CAD pares losses

The US Dollar is edging lower off monthly highs as the Fed’s two day meeting kicks off later. It is expected to trade relatively range bound ahead of the Fed’s press conference tomorrow.

USD/CAD is giving back yesterday’s gains. The rebounding oil price and Canadian election results have under pinned the Loonie. Canada’s ruling Liberal Party led by Prime Minister Justin Trudeau returned to power though failed to gain an outright majority.

USD/CAD -0.5% at 1.2750

GBP/USD  +0.18% at 1.3680

EUR/USD  +0.14% at 1.1742


Oil rebounds on tight supply

Oil prices are heading higher paring at least some of yesterday’s losses. As market sentiment recovers the markets have shifted their focus back onto the tight supply situation in the US. The recovery in output has taken much longer than most anticipated and Shell even warned today that a full return to output is unlikely until 2022 given the damage caused by Hurricane Ida.

US tight supply is overshadowing other factors such as concerns surrounding Evergrande and any potential wider crisis which it may trigger and of course the Fed’s next steps.

18% of the Gulf’s oil production remains offline.

API crude oil stock pile data is in focus later.


WTI crude trades +0.95% at $70.90

Brent trades +0.97% at $74.00



Looking ahead

21:30 API weekly crude oil stock pile data


How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

  1. Open a Forex.com account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. Place the trade.


More from Indices

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.