S&P 500, DAX 40, European Central Bank (ECB) - Talking Points
- S&P 500[1] gains more than 2%, but stalls just short of monthly high
- DAX 40[2] spikes higher as Nord Stream 1 resumes service
- ECB meeting on Thursday dominates an otherwise quiet week
Stocks gained as a quiet economic calendar stateside fueled a rally in risk assets. European sentiment was upbeat as rumors circulated about a potential 50 basis point rate hike from the European Central Bank on Thursday, while Nord Stream 1 also came back online. This mix of news gave a much needed bid to EURUSD[3], which broke through 1.02 and pushed further away from parity. Whether this is a “front-running” of the ECB meeting remains to be seen, as a larger than expected rate hike may bolster recent Euro[4] strength even more.
Back stateside, equities pushed higher as tech shares outperformed. All eyes will be shifting to corporate earnings prior to the Fed meeting at the end of the month, with Netflix set to kick off the proceedings for tech on Tuesday. Equities bounced back from a significant late session decline on Monday, after reports surfaced that Apple may look to slow hiring in some key business areas. A softening Greenback has eased sentiment surrounding risk, with expectations of a 100 bps rate hike from the Fed shrinking each day.
S&P 500 futures have fully retraced Monday’s pullback, where bullish momentum had stalled around 3900. The break of 3900 ushered in a test of the 3920 zone, which has stalled the advance for now. If ES can take out the monthly high, bulls may look to test the late June swing high around 3950. Earnings will have a massive part to play in whether ES can
