7
2010
S&P Futures Battle 1100
The S&P futures are still battling their highly psychological 1100 level as investors return from the Labor Day holiday. The risk trade is taking a bit of a hit today after Germany’s banking association announced that German banks may need an additional $135 billion in liquidity in order to shore up finance. The Euro is being hit particularly hard today and is dragging down the risk trade as a whole. However, intraday losses have been somewhat limited thus far due to the positive sentiment stemming from last week’s rally. Both the RBA and BOJ kept their monetary policies unchanged as they monitor headwinds from recent weakness in U.S. fundamentals. The neutral stance from the RBA shows considerable uncertainty remains despite the jolt of confidence investors received last week. Meanwhile, the U.S. will be quiet on the data front today, leaving the S&P futures in the hands of prevailing psychological forces. The U.S. data wire will be dead again tomorrow. However, investors will find out more details of Obama’s planned measures aimed at stimulating a fledgling U.S. economy. If investors are encouraged by Obama’s proposal and the prospects of it being passed by Congress (unfortunately slim), this could help give a boost to U.S. equities over the medium-term. Investors will also receive key data points from Australia and the UK tomorrow, including Australian home loans and UK manufacturing production. Should these two data points top expectations this would help negate uncertainty stemming from today’s negative EU news. On the other hand, negative fundamentals coupled with an underwhelming reception of Obama’s proposal could tip the 1100 battle in favor of the bears.
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Posted by: Matthew Myers
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