Traders Remain Optimistic As Biden Takes Office
S&P 500 futures are gaining ground in premarket trading as traders prepare for the first term of the new U.S. President Joe Biden.
Biden is expected to sign many executive orders in the first days of his presidency, reversing some of Donald Trump’s policies and boosting response to the coronavirus pandemic.
The market clearly provides Biden with the benefit of the doubt and expects that the new President will be able to provide additional support to the U.S. economy.
Market’s main focus is the new $1.9 trillion stimulus plan which should boost consumer spending at a time when Retail Sales have started to show weakness under the pressure from the second wave of the virus. If Biden succeeds in delivering the new stimulus package in the upcoming weeks, stocks will have an opportunity to gain strong upside momentum.
Janet Yellen Urged Lawmakers To “Act Big”
Yesterday, Janet Yellen stated that U.S. lawmakers should “act big” on the new coronavirus aid package to provide support to the economy.
She argued that the benefits of additional stimulus outweighed the risks of higher debt levels. Yellen’s dovish stance may serve as an additional upside catalyst for the markets.
Interestingly, foreign exchange market traders have not made up their minds on the impact of the new stimulus package, and the U.S. dollar was volatile but lacked direction in recent days. Meanwhile, stock traders are clearly optimistic about Yellen’s future policies.
Oil Moves Towards Multi-Month Highs
WTI oil is currently trying to get to the test of the recent highs at $53.90 as traders bet that the new round of stimulus will boost demand for oil.
Oil-related stocks had a strong trading session on Tuesday and look set to continue their upside move as investors put more money into the sector due to rising oil prices.
Oil traders have managed to ignore all negative developments on the coronavirus front and focused on the long-term picture. The current market mood remains bullish, and WTI oil has a good chance to get above recent highs and move towards the $55 level.
For a look at all of today’s economic events, check out our economic calendar.