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.