The S&P 500 index futures have gained a
modest 0.1% to 5735 points this week, recovering from last week’s losses.
October’s Nonfarm Payrolls data missed expectations significantly, with only
12,000 jobs added—well below the anticipated 106,000—and unemployment holding
at 4.1%. However, the index has shown resilience, partly buoyed by Amazon’s
(AMZN) 6.0% rally to $197.90, supported by other tech mega-caps, preventing
recessionary fears from triggering a broader sell-off. The SPDR S&P 500 ETF
Trust (SPY) reported $4.2 billion in net outflows last week, which suggests
that large investors reduced positions in preparation for the U.S. presidential
election on November 5.
Market sentiment is divided over the election
outcome, with Polymarket showing Republican nominee Donald Trump’s odds
dropping to 57.7% from 67.0% last week, while some polls have shifted in favor
of Democratic nominee Kamala Harris. The USD has softened, dropping 0.76% to
1.09140 on Monday, reflecting expectations of a potential Harris win, which
could further weaken the currency. If Trump wins, however, the Dollar is likely
to strengthen short-term, while the stock market may rally regardless of the
winner. A contested result could introduce significant volatility, with
potential court challenges or unrest adding to the uncertainty.
Both the Federal Reserve and the Bank of
England are anticipated to cut interest rates by a quarter point in their
Thursday meetings. However, the Fed may avoid drawing attention ahead of the
election, while the Bank of England may hint at pausing rate cuts as the U.K.
grapples with fiscal pressures.
From a technical
standpoint, the outlook for the S&P 500 index is unchanged. The benchmark has
returned inside its initial target range of 5700-5800 points. To continue the
rally toward the 6100-6200 targets it needs to hold above 5820-5850 points. The
next resistance lies at 5910-5930 points, with support at 5720-5750 points. Downside
chances for the index are low.
In the commodities
market, Brent crude oil prices have almost recovered their 7% drop in the
beginning of the week. Iran has promised to strike back on Israel. The
Organization of the Petroleum Exporting countries and its allies known as OPEC+
once again delayed oil production cuts. The nearest resistance is at
$78.00-80.00, while the support is at $70.00-72.00 per barrel. It is unlikely
that prices would breach this range before the end of elections in the U.S.
Gold prices have
passed the resistance at $2,710-$2,730 per troy ounce and opened a path towards
extreme targets of $2,870-2,890, with potential highs of $3,200-$3,300 per
ounce.
In the currency
market, the EURUSD is recovering. The pair rose by 0.35% to 1.08340 last week
and by another 0.6% to 1.09000, and slightly retreating to 1.08800 late Monday.
The pair is moving towards 1.10000-1.11000 range.