US futures are pointing higher on Monday, on course for similar gains to what we’re seeing in Europe where indices are threatening to or have broken above recent trading highs, in what could be a bullish sign for equity markets.
As it stands I remain sceptical about the sustainability of the recent rally in equity markets, with the fundamentals not exactly supportive of a prolonged bull run and the charts of S&P 500, Dow and FTSE 100 in particular looking toppy. It could be a very interesting week for equity markets, especially with so many companies reporting third quarter earnings which will undoubtedly be a major catalyst.
It’s also worth noting that next week brings monetary policy decisions of four major central banks – the Federal Reserve, Bank of England, Bank of Japan and Reserve Bank of Australia – which could influence trade this week. While the Fed is widely expected to hold next month, less than a week before the US heads to the polls, the announcement and statement that follows may well offer strong clues ahead of the December meeting which could shape how markets trade in the weeks ahead.
As far as today is concerned, its central bankers that will dominate in the absence of any notable economic data. Speeches from James Bullard and Charles Evans will be of particular interest, with the former being a voting member of the FOMC this year and one of those that did not dissent at the last meeting, and the latter being a voting member in 2017. We could also hear from Jerome Powell and William Dudley – two permanent voters – who are due to meet with members of the SEC and the Treasury.
While today is looking a little light on the data front, following the release of some encouraging PMI readings from the euro area this morning, the rest of the week has plenty on offer which could offer plenty of catalysts for the markets.