- Equity indices advanced in the Asian session boosted by US fiscal stimulus optimism stimulus
- Negotiations in Congress could drive US stock indices near term
- S&P 500 index futures could move lower as price fails to take key resistance.
Stock indices rose in the Asian session after President Trump was discharged from the Walter Reed Army Medical Centre and amid renewed fiscal stimulus optimism.
Japan’s Nikkei 225 gained+0.48%. Australia’s ASX 200 index only moved mildly northwards despite the Reserve Bank of Australia’s decision to keep its monetary policy on hold.
The risk-sensitive Australian Dollar pushed briefly above 0.72 immediately after the RBA announcement before ending the session-0.2% lower.
The safe havens US Dollar and Japanese Yen treaded water versus major peers, whilst gold headed lower.
A speech from European Central Bank President Christine Lagarde and another from Federal Reserve Chairman Jerome Powell will be in focus, in addition to Canadian trade balance release for August.
Lack of Fiscal Stimulus Developments Cap S&P 500 Upside
Nancy Pelosi’s recent comments that fiscal stimulus could still be agreed before the US Presidential Election in November could support US stock markets. The House Speaker and Treasury Secretary Steven Mnuchin continue to negotiate.
Pelosi believes that Trump’s recent covid diagnosis could aid talks. However, Democrats are aiming for a $2.2 trillion package whilst Mnuchin is targeting a smaller $1.6 trillion deal.The difference means that it is unlikely that US policymakers will agree to a deal before the US Elections.
US Non-Farm Payrolls
The non-farm payrolls report for September massively missing forecasts.and the Fed supporting the case for additional fiscal stimulus, highlights the need for an additional rescue package.
US S&P 500 index could continue to be driven by stimulus talks. In the absence of an agreement in the coming weeks, risk aversion could soar.
