U.S. Stocks Set To Open Higher As Traders Remain Optimistic On Stimulus Deal

Coronavirus Aid Package Negotiations Remain In Focus

S&P 500 futures are gaining ground in premarket trading as traders hope that another stimulus package will be negotiated soon.

Currently, stocks are very sensitive to any stimulus news. Yesterday, U.S. reported that Initial Jobless Claims increased from 837,000 to 840,000, highlighting the need for another stimulus package that could provide support to the job market and boost consumer activity.

At this point, it looks like the market believes that a big stimulus package is inevitable, and traders are willing to increase their exposure to riskier assets.

Encouraging Data From China Provides Support To Global Markets

Today, China reported that its Services PMI increased from 54 in August to 54.8 in September.

Many developed countries reported decline in Services PMI in September. For example, Euro Area Services PMI declined from 50.5 in August to 48 in September, slipping back into the negative territory as numbers below 50 show contraction.

Investors see China as an example of what will happen to the world economy when the virus is finally contained. While China was the country where the virus originated, it managed to get it under control and enjoys a decent economic rebound.

Data from China is especially supportive for the commodities segment since China is a major source of demand for many commodities.

Oil Fails To Settle Above The Resistance At $41.50

This week, oil managed to rebound from $37 to $41 thanks to a strike in Norway and a hurricane in the U.S. Gulf of Mexico. This rebound provided support to the beaten oil-related stocks which are finally heading for a positive week.

While near-term catalysts are bullish for oil, it remains to be seen whether current levels are sustainable.

The World Health Organization has recently reported a record one-day increase in global coronavirus cases, and European countries look set for additional restrictions which may hurt demand for oil.

The key question for oil traders is whether near-term factors that limit supply will be able to offset worries about the continued spread of coronavirus and its potential impact on the economy and oil demand. If such worries persist, oil may find it hard to stay above the $40 level.

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