A huge performance from stock indices was seen last month due to Biden, vaccine optimism, and expected action from the FOMC, all adding fuel to the bulls' run.
Let's take a look more in-depth at some of the key points to keep this moving going and how things are structured technically...
The S&P 500 has had its best November ever, and the Dow Jones posted its biggest monthly gain in 33 years.
The rally in the stock markets picked up some pace when it became clear that President-elect Joe Biden was set to beat Trump and take over the White House in January. He, as perceived by the markets, is excellent for risk-appetite. The stance with China and the deteriorating relationship over tariffs started by outcoming Donald Trump could be improved somewhat. Biden is seen as he is more likely to take a less harsh approach with China, which would be supportive for risk-on trading. When the trade wars were flaring up, markets were piling into safety, USD, and JPY.
In addition, former Fed chair Janet Yellen has been named(dovish stance) as his treasury secretary. She has called for opening fiscal spending taps to revive an economy. Yellen would be seen as a USD negative but positive for riskier currencies and stocks.
USD is being hit by progress towards a COVID-19 vaccine rollout. AstraZeneca announced that its vaccine could be around 90% effective. The British drugmaker will prepare the submission of data to authorities around the world that have a framework for conditional or early approval. Elsewhere, final results from the trials of Moderna's vaccine against Covid-19 confirm it has 94% efficacy, and nobody who was vaccinated with it developed the severe disease, said the company, kickstarting the approval process with regulators around the world. Furthermore, Pfizer Inc and Germany's BioNTech SE said their vaccine candidate had demonstrated greater than 90% efficacy that rose to 95% with analysis of full trial data. (All supportive of risk appetite and USD weakness)
As a result of the economic damage occurring to the U.S., it will force the central bank (FOMC) for greater action (stimulus), and it means interest rates will be lower for longer. There is a growing expectation that they will announce a boost to their QE program in December. Note stocks love QE; it means more money going around for people to purchase goods and use services offered by businesses.
Technical chart view - Dow Jones (US30)
Price action via the daily chart view is flirting around the big psychological 30K mark, with bulls making progress in breaking this down convincingly.
A period of consolidation has been observed from 25 November to 1 December at the writing time. A bullish flag structure is viewable with the buyers set to capitalize on this—the nice round psychological 30,500 in sights just ahead as a possible area to the upside.
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