US Open – Wall Street Flat After Broad Surge

Investors Increasingly Encouraged

The European surge isn’t rubbing off on Wall Street yet, with US futures pointing to a flat open after two strong days for stock markets on that side of the pond.

Here in Europe, we’re probably seeing a little carry over momentum from the afternoon US session on Wednesday, where stock markets thrashed out new records. And not only was the rally not driven by tech, many of the big names actually sat this one out with Apple falling 2% after being down more than 5% at one stage and Tesla dropping 6.6%, an improvement on the 15.42% plunge earlier in the session.

The broad based nature of the latest rally is encouraging and suggests there’s more to it than just pandemic-proof tech firms asserting their dominance over US indices. The more broad based this becomes, the more it signals a turning of the tide as far as the economic outlook is concerned, at least among those on Wall Street.

Europe buoyed by stimulus

Europe has suffered a number of setbacks in recent weeks as a rise in Covid cases across the continent has led to renewed travel restrictions and taken the wind out of the sails of the economic recovery, which until then had exceeded expectations.

The recovery fund agreed by the 27 member bloc gave cause for optimism over the summer and this is now being compounded by national stimulus efforts, with France looking to relaunch its economy with a €100 billion package and Germany backing plans for further extraordinary deficit spending next year, having already extended its employment subsidies to the end of 2021. Countries are not taking this pandemic lightly and the latest spikes are just a reminder of the damage it will continue to cause.

This was evident in the PMIs this morning, with countries like Spain and Italy that have suffered significant spikes seeing a contraction in the services sector once again. Combined with the inflation data, which went negative earlier this week, there’s a growing case for more stimulus from the ECB in the coming months.

Economic Calendar

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

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam