Investors in a Trance as Stocks Shuffle Higher

European equity markets are expected to open higher on Monday, although trading is likely to be relatively light given the US bank holiday which helped drive similar conditions in Asia overnight.

It would appear we’re still in a kind of trance at the moment whereby equity markets continue to shuffle higher in the hope that Donald Trump will deliver on his fiscal stimulus, tax and deregulation plans and yet, there’s no conviction in the rally’s. This isn’t overly surprising given the amount of political risk at the moment but you wonder how much longer we can remain in this state before we wake up.

Risk Aversion Percolates

That’s not necessarily to say markets are going to collapse or even enter correction but I think we’re nearing the point at which investors may start demanding something a little more concrete. It’s difficult to ignore the moves in Gold and the yen alongside this which typically accompany more risk averse conditions. Perhaps it just reflects underlying uncertainty which is a concern.

Gold is actually trading a little lower so far today having interestingly failed to break above the high from 8 August, despite coming very close. The next big test for Gold will now come around $1,216.73, last week’s lows, with a break through here possibly triggering a move back below $1,200 towards $1,180.63.

Gold Daily

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As mentioned above, with it being a bank holiday in the US today, we could be looking at a slightly quieter session. We have some scatterings of low level data throughout the day but nothing that I would expect will cause too much of a jolt in the markets. The Reserve Bank of Australia minutes from its recent meeting, released overnight, will likely be the next event of note.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

MS

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.