US Stock markets start the new week on the front foot

USA100, H1

Wall Street opened higher, with the three major index markets in the green. Reopening stocks are leading gains, as Covid cases continue to fall in the US, while tech issues are firmer as well, despite the volatility in cryptocurrencies, which lately have impacted USA100 direction in particular. The USA100 opened at 13,572, up 101 points from Friday’s close, and while USA futures had rallied some 0.81% earlier, the USA500 opened at 4183.52, up 0.67% or 27.68 points, while the USA300 was up 171 points or 0.5% from Friday’s close to trade at 34,379.

Inflation fears have kept equities volatile of late, and more of the same can be expected, as investors continue to fret over the Fed and its potential to taper its QE program. The next FOMC meeting is still over three weeks away, scheduled for June 15-16, with lots of Fedspeak, economic data and sentiment to digest before then.

Earlier, Fed Governor Lael Brainard, an arch Dove, confined her prepared remarks on digital currencies. She said it is vital for the US to be involved with a Central Bank Digital Currency, CBDC. It’s an open question, however, how CBDC would affect monetary policy. And she and the Fed worry that a new private currency carries various financial stability risks, including run risks and consumer-protection risks, and could fragment the payments system with less than 100% trust in the currency. She also said in a Q&A session that the US is “in the middle of an unprecedented rebound” for the economy and that she is expecting “some” higher inflation as the economy moves from pandemic lows, due to a surge in demand, bottlenecks in supply chains and boosts from relief payments. All these price pressures will “subside over time”.

The USA100 H1 chart remains bid, and has continued to move higher following the break and breach of the 21-hour moving average earlier at 13,433, the index has also broke over Friday’s high and trades at 13,640, representing a 3.5 x ATR(14) move from the entry earlier.

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Stuart Cowell

Head Market Analyst

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