It’s been another day of political brinkmanship in the US over a much-needed second dose of fiscal stimulus, as the clock ticks closer to the 3 November US presidential election where Republicans and Democrats are trying to gain an edge in vying for votes.

House Speaker Nancy Pelosi had stated that she was not in favour of a mini fiscal stimulus package to help specific sectors of the economy, such as airlines. On the other hand, the White House administration seemed to have give in to renegotiate a broader based stimulus plan, but reiterated opposition to the $2.2trn plan proposed by the House Democrats which was “over the budget”.

Overall, risk assets continued to be juiced up by “stimulus optimism” that saw US valued defensive-oriented stocks outperform their higher growth technology counterparts; the S&P 500 (+0.8%) led by the close of yesterday’s US session over the Nasdaq 100 (+0.4%).

WTI crude oil futures spiked up by 3.1% to close the US session at 41.19, buoyed by a positive comment from OPEC that the “worst is over” for the oil market. Week-to-date return is now at +11.3% for the WTI crude oil futures, which has erased losses that started from the18 September 2020 high of 41.72. In addition, gold futures (COMEX) consolidated its overnight gain where it has added +0.6% (1,910) in today’s Asian session at this time of the writing; the key medium-term resistance to watch remains at 1,929.

China’s financial markets have reopened today after the week long “Golden Week” holiday. The CSI 300 has staged a rally of +1.5% (4,656) so far supported by a weaker USD/CNH (offshore yuan) that continued to trade below 6.74. In addition, positive economic data releases also aided the current risk-on optimism. The Caixin Services PMI rose to 54.8 in September from 54.0 recorded in August, a fifth consecutive month of growth.

Chart of the day: Bullish breakout in S&P 500 futures

Source: CMC Markets


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