US Open: China, Saudi Arabia lend US equities confidence as week gets underway

Market Analysis /
22 Oct 2018

Wall Street sold off into the close on Friday, but renewed risk appetite is driving gains for futures ahead of the opening bell. Word that Saudi Arabia has no intention of using oil supply as leverage in retaliation to any sanctions following the murder of the Washington Post journalist seems to be one key driver of sentiment right now, whilst tax reform by Beijing in a bid to bolster Chinese economic growth - and avert a global slump – is adding to the nascent air of confidence.

The appetite for risk could however find itself being reversed quickly with regard to developments in US foreign policy. Donald Trump is ratcheting up tensions with Moscow by backing out of a nuclear arms treaty, whilst the prospect of thousands of central American refugees attempting to cross the border from Mexico is also cause for concern – and one that could lead to a military response. A shift in sentiment would give the markets justification for another bout of intense profit taking. US earnings season rolls on with names like Kimberly Clarke and Halliburton publishing today, although it’s a case of waiting until midweek before the higher profile names including Boeing and Microsoft are scheduled to report.

Ahead of the open we’re calling the DOW up 58 at 25502 and the S&P up 5 at 2773.

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