US stock futures pull back as NYSE closed for MLK day

Summary:

• US indices pull back after strong recent gains

• Low volumes expected with cash markets closed for Martin Luther King day

• IMF cuts global growth forecast to 3.5% - slowest in 3 years

There’s been a pretty dramatic shift in sentiment for stock markets in the past couple of weeks with the doom and gloom which captivated traders up to the Christmas break giving way to an all round more positive outlook as the markets bounced back from heavy declines. On the fundamental front not a lot has really changed, with some dovish remarks from Powell on a couple of occasions causing a pretty remarkable shift in future US monetary policy expectations, with 0 hikes now expected for 2019. In addition upbeat comments on the US-China trade war after low-level has also alleviated some of the negativity but having said that the parties still remain some way apart and haven’t made any tangible process on closing this.

Friday’s session saw a strong rally for the S&P500 (US500 on xStation) which built on the gains seen at the end of the previous day with some positive news hitting the wires late on during Thursday’s session which caused the market to break above the 2626 level. In doing so price also ended above the 50 day SMA for the first time in over 6 weeks, and you have to go all the way back to early October to find consecutive closes above this indicator - a feat that was achieved on Friday’s close. The 50 SMA itself still points lower, but this could be seen to suggest the medium term trend has turned up and as long as the market doesn’t fall back below 2626 then further gains could lie ahead. In the absence of any daily reversal patterns then the market looks well place to build on the recent gains with little by the way of swing resistance until 2824.   

The US500 has posted consecutive closes back above the 50 day SMA for the first time since October. The market has bounced an impressive 350 points off the lows with 2626 now seen as possible support. Source: xStation

There’s no economic releases expected from the US this afternoon, not due to the ongoing government shutdown which continues to extend its record as the longest ever, but due to a bank holiday to remember Martin Luther King. The holiday may mean that volumes are a little lighter than usual. Elsewhere, in terms of economic data, the IMF have released their latest growth forecasts, which show the fund expect global growth to drop to its slowest in 3 years during 2019. The IMF now project 2019 growth of 3.5%, before a slight uptick to 3.6% in 2020. The downwards revision to global growth is due largely to a more pessimistic outlook for the Euro area, which is now projected at 1.6% in 2019, down from the 1.9% forecast last October. From the US perspective, the forecasts are unchanged at 2.5% in 2019 and 1.8% in 2020.