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Premarket: Futures Pare Gains As Fed’s Powell Avoid To Talk About Negative Rates

Nasdaq 100

The futures in Wall Street trading higher in premarket, ahead of Fed’s Chairman Jerome Powell as the speculation on negative interest rates rises. Three Fed members said earlier this week said that there is no need to adopt negative interest rates. 

The recent optimism about the reopening of the economies boosted stocks, but the recent spike in new cases in South Korea, Germany and China raise concerns that a premature reopening might further damage the global economy. 

Jerome Powell Comments

Chairman of the Federal Reserve System, Jerome Powell, didn’t offer any signal in his opening remarks and he didn’t mention anything about the negative interest rates. He said that the coronavirus crisis raises long term concerns, and the outlook is highly uncertain while there are significant downside risks. He added that “Additional policy measures may be needed to avoid lasting damage to the economy,” 

The Dow Jones futures are 0.08% higher at 23,592. The S&P 500 futures are 0.07 higher at 2,854 while the Nasdaq futures are 0.26% higher. 

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European Markets Retreat

European markets are under selling pressure, after news that the eurozone industrial output in March fell 11.3% below the market’s expectations. Dax is 1.33% lower at 10,675, while the CAC40 is 1.51% lower at 4,40. The UK economy contracted by 2% in the first quarter better than the expectations of a -2.6% decline. The March GDP drop by 5.8%.

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Gold prices are diving as the US trading session gets underway. The move lower in gold prices is fueled by a stronger US Dollar and US stock markets being near their all-time highs, lowering the demand for gold. However, the mood may change in the next few hours as the US ISM Non-Manufacturing Index is due.

Technically, gold prices are trading sideways between the October 11 low of $1473.68, and the October 25 high at $1518.41. The benefit of this well-defined rectangle pattern is that when the price finally starts trending the price should hopefully not look back and reach its target. The pattern also provides price targets.

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If gold prices were to trade above the October 25 high of $1518.41, then the price might be able to reach the $1563.14 level, as the difference between the upper and lower limit of the pattern is added to the October 25 high. On a break to the October 11 low at $1473.68, the price might be able to reach the $1428.95, as the difference in the range is subtracted from the October 11 low.

Time will tell if bullish or bearish traders will command price as the chart pattern itself is neutral in its outlook.

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