The DOW may have closed at close to six-month highs on Friday night, but with a potentially disappointing Q1 earnings season kicking off mid-week, the air of confidence does seem to be running a little thin. That sits at odds with Friday’s economic data, where the slightly better than expected non-farm payrolls print gave little cause for concern whilst lacklustre wage growth added to the idea that the Federal Reserve may yet be pushed into a more dovish position over interest rate policy, which in turn should be good for stocks.
There’s also progress being made in the US-China trade talks and there’s even word of fresh stimulus measures from Beijing, but this is failing to deliver much in the way of upside. Aside from US Durable Goods Orders before the opening bell, we have a relatively quiet day ahead in terms of economic data, but again the pace is unlikely to be depressed for long. Wednesday’s FOMC meeting minutes have the potential to see clarity over the end of quantitative tightening, again something which could give stocks another fillip. Overall however, given the deteriorating global trade situation, there’s plenty of reason as to why the current pause for breath looks justified.
Ahead of the open we’re calling the DOW down 90 at 26335 and the S&P down 4 at 2889.
Soaring US yields trigger the wrecking ball effect as yields become a source of volatility for risk, rather than a source of support