October Optimism Likely to Boost Markets in November
The last week of October ended not with a standard rise, but with new all-time highs in the American markets. The Dow Jones and S&P 500 broad market index finished at 35819.56 and 4605.38 points, adding 5.84% and 6.91% respectively. The bearish engulfing of September has been neutralised and traders are looking to the future with renewed optimism.
This week investors are waiting for the Federal Reserve’s (Fed) meeting and the Non-Farm Payrolls report for October to be released. Fed’s Chairman, Jerome Powell, said in October that tapering could “easily” happen in November, and it will not be contingent on a “knockout” payroll report. However, we may recall that for the last two months the American labour market was quite disappointing. According to consensus polls, Non-Farm Payrolls are expected to have added some 385,000 new jobs in October. However, this number might be, once again, subject to an alternative reality and could come out to be lower again.
Nevertheless, over the last 20 years history has shown that in November stock markets mostly perform gains Stocks were only down in 2007 and 2008. For 70% of cases, stocks were up in November and for 20% of cases stocks performed sideways during the month. Such a paradigm could be easily explained by the Santa rally expectations as traders usually keep their positions open before Thanksgiving Day. So, we may likely see a continuation of the trend that was established many years ago.
Investors should also watch out for the Bank of England’s (BoE) meeting this week on November 4. Both the Fed and BoE are not expected to raise interest rates before 2022, but BoE usually makes its move first.
Besides, the governor of BoE, Andrew Bailey, said inflation was more persistent than feared and would rise further and remain high for longer than first expected. So, the Pound may have a reason to rally. The British currency ended October at 1.3691 against the U.S. Dollar. The Pound rebounded close to the 1.3400 strong support level. Now, we can see that the Pound is in the cross passes of moving averages – EMA21 and EMA 55, if we look at the daily charts’ timeframe. The movement over the last ten days of October might be seen as a little downward. An upper breakthrough of this channel could mean a continuation figure – the rising “flag”. So, if we see the Pound above 1.38000-1.38100, the GBPUSD may rise to 1.4050-1.4070.
This week investors are waiting for the Federal Reserve’s (Fed) meeting and the Non-Farm Payrolls report for October to be released. Fed’s Chairman, Jerome Powell, said in October that tapering could “easily” happen in November, and it will not be contingent on a “knockout” payroll report. However, we may recall that for the last two months the American labour market was quite disappointing. According to consensus polls, Non-Farm Payrolls are expected to have added some 385,000 new jobs in October. However, this number might be, once again, subject to an alternative reality and could come out to be lower again.
Nevertheless, over the last 20 years history has shown that in November stock markets mostly perform gains Stocks were only down in 2007 and 2008. For 70% of cases, stocks were up in November and for 20% of cases stocks performed sideways during the month. Such a paradigm could be easily explained by the Santa rally expectations as traders usually keep their positions open before Thanksgiving Day. So, we may likely see a continuation of the trend that was established many years ago.
Investors should also watch out for the Bank of England’s (BoE) meeting this week on November 4. Both the Fed and BoE are not expected to raise interest rates before 2022, but BoE usually makes its move first.
Besides, the governor of BoE, Andrew Bailey, said inflation was more persistent than feared and would rise further and remain high for longer than first expected. So, the Pound may have a reason to rally. The British currency ended October at 1.3691 against the U.S. Dollar. The Pound rebounded close to the 1.3400 strong support level. Now, we can see that the Pound is in the cross passes of moving averages – EMA21 and EMA 55, if we look at the daily charts’ timeframe. The movement over the last ten days of October might be seen as a little downward. An upper breakthrough of this channel could mean a continuation figure – the rising “flag”. So, if we see the Pound above 1.38000-1.38100, the GBPUSD may rise to 1.4050-1.4070.