Spreadex Market Analysis: S&P 500 Futures Trading Higher Again

AM Analysis – “European bourses opened positively today” – Shavaz Dhalla
European bourses opened positively today and continued to push all-time highs as investors betted that the FOMC will reaffirm their commitment to its $85 billion monthly bond purchasing amidst a series of data which has indicated that the US economy is still stumbling. For example, monthly pending home sales figures as well as consumer confidence figures released this week have both fallen below expectations. In addition, investors are also concerned that the recent government shutdown has negatively affected the economy.

Thus, since officials have repeatedly announced that economic fundamentals need to be strong before tapering is considered, it seems that the general consensus in the market is that quantitative easing will continue for now.

However, there are always the contrarians out there who have pointed out that lately the Fed has been moving away from its predictable stance and have even been going against market expectations. One only has to go back to September when the markets were generally expecting tapering to happen, although in the end officials announced that they were continuing with their bond purchasing. Clearly despite the general consensus, investors should at least brace for the possibility that the majority could once again be wrong.

PM Analysis – “S&P 500 futures are trading higher once again” – Max Cohen

S&P 500 futures are trading higher once again as investors await the outcome of the Federal Reserve’s policy meeting which concludes today, extending its impressive run. The equity gauge has rallied 5.4 percent in October, heading for the biggest monthly gain in two years, as lawmakers ended a 16-day government shutdown and agreed to extend the U.S. borrowing authority, avoiding a possible debt default.

Market participantsare now focused on the Fed’s timing and depth to reductions in monthly bond purchases. With the government shutdown expected to reduce economic growth by 0.3 percent this quarter and a stream of weak data, including todays disappointing U.S jobs report, there is a growing expectation that the central bank will maintain stimulus measures at the current levels until March 2014.

The 130,000 increase in employment was the smallest in six months and followed a revised 145,000 gain in September that was weaker than initially estimated. The monthly figures are the first to show how employment fared during a 16-day partial federal shutdown that started on October 1st and there is no doubt that Federal Reserve policymakers will be watching employment figures as they debate when to scale back the record monetary stimulus.

[The original articles by Spreadex can be found here.]

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