Pre Market 07:15 Update
UK futures point to a strongly positive open as the FTSE futures signal a 50 point rise to clear the 5700 level.
The lower trendline around 5530 in the FTSE 100 proved a key decision area which had been tested and supported over the past week: yesterday's strong rally off the lower trendline (see below) suggests that a new month has brought new cheer. As a forward-looking discounting mechanism, even Lockdown 2.0 seems to have been rapidly digested and adjusted for with even the domestic FTSE 250 recovering many of its losses yesterday as it took the implications of potentially several month's of restrictions into its stride. The mid caps challenged the 17000 level yesterday in the index and held suggesting a recovery in the mid caps is also on the cards with potentially new leaders emerging in this Covid 2.0 world
VIX at 37, Fear & Greed at FEAR
All that being said continued volatility is to be expected especially if the US election proves indecisive, divisive or both. The VIX dropped back yesterday to a 37 handle, still highly elevated but off its recent highs of above 40. The CNN Fear and Greed composite which aggregates 7 different metrics of market sentiment is reading a fearful 25: a level not seen since May 2020.
America staged a relief rally with the S&P up 1.3%, NASDAQ 0.3% while the DOW checked its 200MA last Friday and bounced yesterday by 1.6% see market dashboard .
It's likely that a new month after October's pre election rebalancing as well as the expectation of more stimulus in the US post a decisive election is driving sentiment improvement.
20 companies report today including potential market movers CHG, ABF, CRST, WEIR
Asian equities rallied overnight while oil staged a recovery in Brent from the $36 level to clear $38 as Russia held off production tapering for 3 months: with gold pausing around the $1892 level after yesterday's recovery of 0.85%
A decisive outcome in the US election may well bolster dollar which has been under pressure over the past few weeks: many eyes will be on the DXY and its trajectory over the coming hours and days.
