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Vladimir Zernov
U.S. Stock Market

Investors Focus On The Future

S&P 500 futures are pointing to a higher open as investors focus on the reopening of the world economy and ignore risks like the worsening U.S. – China relations, protests in the U.S. or a potential second wave of coronavirus.

The optimism is broad – based, and it’s hard to define one catalyst that is responsible for the current upside. In general, investors are optimistic about a V-shaped recovery and believe that the never-ending monetary stimulus will continue to push asset prices higher.

In addition, many companies are developing COVID-19 vaccines, and the market expects that some of them will be successful in this endeavor and ensure the normal functioning of the world in 2021 and beyond.

This optimism allows the market to ignore current economic data and focus on how the economy will look like in the following quarters. At this point, the current upside trend appears to be strong.


European Central Bank Is Set To Expand Its Asset-Buying Program

The European Central Bank will likely increase its Pandemic Emergency Purchase Programme (PEPP) by 500 billion euros on Thursday. The original size of PEPP is 750 billion euros.

The European Central Bank has little choice but to continue buying assets as the EU economy will look very bleak in 2020. Most recently, one of the leading EU economies, France, has changed its 2020 growth outlook from -8% to -11% due to the impact of the strict lockdown.

Such programs artificially inflate asset prices so the increased size of PEPP will serve as an additional bullish catalyst for the world markets.

Oil Continues To Gain Ground Ahead Of The OPEC+ Meeting

Oil markets are in the upside mode, and the leading world benchmark Brent is already close to $40 per barrel.

While there’s some uncertainty regarding future production cuts, the general optimism of the world markets continues to push oil prices higher as traders bet that economic recovery will lead to increased demand for oil.

Energy is the main laggard among the stock market segments on a year-to-date basis so oil-related stocks may have solid potential for additional upside in case oil prices continue to increase.

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

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