Investor sentiment is gradually shifting to the Federal Reserve meeting due later this week
Wall Street stocks traded mixed on Friday, with the Dow and S&P 500 posting modest gains and the Nasdaq finishing in the red amid the ongoing sell-off in the tech sector. Apple dropped 1.3% and Amazon fell by nearly 2.0%. The Nasdaq closed 0.6% lower while at its session high, the index rose as much as 1% and was down more than 1.7% at one point during the session. This uncertainty in the markets could persist at least in the weeks to come as the US elections approach, US-China trade tensions persisting, virus-related developments continue to unnerve investors, and the outlook for economic recovery remains cloudy.
Asian stock markets traded higher on Monday, buoyed by COVID-19 vaccine hopes after AstraZeneca said it has resumed British clinical trials of its COVID-19 vaccine. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.7%. Investor sentiment is gradually shifting to the Federal Reserve meeting due later this week. The Bank of Japan and the Bank of England are also due to hold a policy meeting this week. The central banks’ tone will set the tone for global markets these days.
In Europe, stocks opened in the green to start the week, also receiving a boost from news that Phase III trials of AstraZeneca’s coronavirus vaccine have resumed in the U.K. Meanwhile, the German Economy Ministry said in its latest monthly report that the ongoing economic recovery has weakened lately but will likely continue in the remainder of this year. US stock index futures are pointing to an upbeat open after the tech-heavy Nasdaq ended its worst week since March.
Meanwhile, the greenback came under some pressure on Monday amid the prevailing risk-on tone in the global markets. EURUSD climbed above the 1.1850 area, targeting the 1.19 handle and gaining for the fourth day in a row. Later in the week, the pair could add to its recent gains if the Federal Reserve delivers a dovish tone, citing the coronavirus-related uncertainty and mixed economic data. Once above 1.19, the common currency may retarget the 1.20 barrier but the question is if the potential gains could be sustainable as market sentiment remains unstable.