The U.S. S&P 500 broad market index peaked to 4585 points on Tuesday. It seems the index is eager to take advantage of all opportunities to rise before Thursday and reach the ultimate resistance level of 4620 points. It looks like nothing is going to stop it, neither disappointing Facebook Q3 reporting, nor other FAANG (Facebook, Apple, Amazon, Netflix, Google) weak reporting that is going to be presented over the next few days.
Evegrande’s offshore bond payments are still a risk factor as the third largest Chinese developer is struggling to pay the interest of $40 million by Wednesday. However, it is likely that Evegrande will avoid technical default as it already found the money needed to make payments on larger amount of $83.5 million last week. So, is seems that Evergrande will avoid “hard landing” for some time.
Nevertheless, nothing is going to prevent the S&P 500 index from reaching the top, new all-time high of 4620 by Thursday. Dovish rhetoric of the European Central Bank (ECB) and weak U.S. Q3 GDP figures may help the market to retain its gains before a cornerstone meeting of the Federal Reserve (Fed) on November 2-3. So, even the announcement of the schedule and the pace of the tapering of the bond-buying program of $120 billion could not spoil the party.
Great plan! The S&P 500 index is just going with the flow and has left far behind the dangerous support level of 4440. The rally towards 4460 continues.
Crude prices reached their target for a possible correction. The Brent crude benchmark quotes reached $86.61 per barrel, the high of 2018, and retested it at $86.63 per barrel. So, investors may take a breather, leaving crude prices to perform a correction. But there is still an open window for crude prices to rise this week, so we may expect a short correction of Brent crude prices to $84.0-85.0 per barrel.
Gold prices are on the upside, targeting $1840 per troy ounce. Considering the positive background in global commodity markets, and a possible weakness of the U.S. Dollar after Q3 GDP data release, prices may touch this target by the end of this week.
FX market is on a standstill ahead of the ECB meeting. EURUSD is sitting on the important support level of 1.1600. Any confirmed closing below this level technically would mean major opportunities for a decline to the first target of 1.15500 and the ultimate target of 1.1300. However, such a rally is hard to expect considering the upcoming Fed meeting next week. It is more likely that the pair would remain close to the 1.1600 area with a possible rebound to 1.16400.
The British Pound looks more fresh and ready for the fight. But all its bravado may easily vanish if the Pound unexpectedly slips to 1.36700-1.37200 by the end of this week or by the start of the next one after ECB prompts the Bank of England to maintain ultra-loose monetary policy, postponing tapering for later.