A hope-driven surge higher in European stock markets on a possible deal for Greece coupled with the European Central Bank raising the limit of emergency lending to Greek banks has spilt over into US equities for a higher open on Monday. The projected open on Monday undoes losses seen in major benchmarks on Friday which saw increased volatility from triple witching expiry in options markets. Underlying the positivity in US markets is the Federal Reserve’s apparent assurance that it is in no rush to hike rates at its latest policy meeting last Wednesday. The Fed’s dovishness was backed up by weaker than expected CPI data and maybe again this week by the final US GDP reading for Q1. According to the Fed’s ‘dot-plot’ a number of participants switched from expecting two rate hikes in 2015 to just one. The Fed are unlikely to hike rates just because they have been zero-bound for a long time, it is waiting for the data. Really, the Fed hasn’t changed its stance of data-dependence, the inflation data just isn’t close enough to target yet. The dollar index hit a one-month low last week. Although the US economy is relatively unexposed to the currency because of its minimal reliance on exports, many top-flight international companies said earnings were impacted by a strong dollar in the second quarter. The fall back in the dollar in the past month is a positive for US equities and raises the chance of a break out higher from the jagged uptrend seen this year. Government bond yields are up again on Monday but for the time being, the recovery in bond prices since the June 10 low supports US equities. Apple shares may be in focus on Monday after the iPhone-maker U-turned on its policy to charge artists during the 90-day trial period of its new streaming service, seemingly caving in to criticism from singer Taylor Swift. Swift’s battle with market leader Spotify is clearly something Apple’s PR department wish to avoid replicating, just as the company’s rival music streaming service gets going. Existing home sales are expected to 5.27M from 5.04M previously. Futures suggest the: S&P 500 will open 14 points higher at 2,123 with the Dow Jones expected to open 27 points higher at 18,142 and the Nasdaq 100 36 points higher at 4,549. CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
Greek hope spills over to US for higher open, Apple caves in to Taylor Swift
01:00, 22 June 2015