Wall Street Poised For Best August in Decades
A rather flat end to an otherwise very good month, with indices from Europe to the US enjoying their best August in many years.
There’s been nothing normal about 2020 and this month is no different. The S&P and Nasdaq are on course for their best August since the 80’s while the Nasdaq hasn’t enjoyed one like this since 2000. In Europe it isn’t quite that extreme but then indices this side of the pond have lagged the US for some time.
There’s growing optimism that we’re getting closer to a Covid vaccine that will unleash the potential of the economies around the world and until then, tech stocks have gone stratospheric and central banks have flooded the system with liquidity. Suddenly we’re looking at the tech sector as a Covid safe haven as the lockdown dramatically accelerated the move online.
This is a data heavy week but much of it, as we’ve seen today, is low-tier and the one that people really care about we’ll have to wait until Friday for. It’s also likely to be a mixed bag, as we saw with the Chinese PMIs which highlighted the domestic success but challenges abroad. More PMIs to come tomorrow while the rest of today is a little quieter.
Oil pares PMI gains
Oil pared its earlier gains as we made our way through the European session, in keeping with what we’ve seen with other risk assets more broadly. Both Brent and WTI are pushing against their 200 daily moving averages to the upside and are clearly still seeing strong resistance. The Chinese data gave us an early lift but the global picture is still uncertain which should stop oil prices taking off again.
Gold squeezes out small gains
Gold is squeezing out small gains on Monday, buoyed by a slightly softer dollar. It bounced back strongly late last week and is managing to hold on to these gains for now. The big US data comes later in the week though so we may have to be a little patient. The Fed has made its position clear, now its over to the data to dictate things. The key level to the upside for gold remains $2,000 while $1,900 now represents a potential floor.
