Surging Global Equity Prices
STOCK INDEX FUTURES
Global equity markets overnight were higher with the exceptions generally located in Europe and the UK. While the full approval of the Pfizer Covid 19 vaccine was largely anticipated, the formal confirmation combined with confidence that the Delta variant can be controlled by the initial vaccine, gives added weight to the bull case. In fact, the Pfizer CEO has suggested that the company is confident in its ability to modify the initial vaccine, even though it shows significant efficacy on its own. A surprise addition to the bull case this morning is significant strength in the tech sector after a widely followed fund manager recommended and or increased their holdings of Chinese tech sector stocks. Earnings announcements will include Medtronic and Best Buy before the Wall Street opening while Intuit reports after the close.
DOLLAR: While the correction in the dollar was not extended downward overnight, the dollar sits just above a downside breakout in a fashion that portends additional declines. Obviously, the primary driving force of the recent washout in the dollar, is a shift from surging tapering talk, to a market unsure as to the timing of the actual tapering shift by the Fed. Certainly, weak US data will favor those thinking it is premature to consider tapering, but it is also possible that surging global equity prices will ultimately leave the bias in the dollar pointing downward. Close-in but unreliable support in the dollar is seen at a double low of 92.96.
SWISS: The Swiss should see lift from bullish equity market action early today and from the positive German GDP report released this morning. However, the upside track is not definitive, and resistance hangs heavy just under 1.10.
CANADIAN DOLLAR: With a definitive upside extension and 4-day high overnight in the Canadian, the currency has assumed a leadership role against the US dollar. Therefore, the 79.00 level becomes support, with resistance not seen until the 200-day moving average at 79.63.
While the Treasury bond market forged a 3-day low overnight, the market rejected that dip as if some form of value was found around 165-08 in the September contract. While US scheduled economic report data yesterday showed some contradictions, the number of positive reports for the economy outweighed the negative reports on the economy giving the bear camp a very minor edge. The bear camp should be further emboldened by what appears to be another risk-on day in US equities, but the subject of tapering by the Fed certainly remains on the market’s dashboard. The most recent US daily CDC infection count was only 43,222, but that is a typical decline in infections for a Sunday reading. While we are having difficulty ascertaining the most definitive bullish focus of the equity markets, the overnight recovery is likely the result of a surge in Chinese tech sector stock prices and that should weigh on Treasury prices.
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