US indices look set to follow their European counterparts and head south at the start of the week.
The Dow Jones Industrial Average is expected to shed 90 points to open at around 30,908 while the broader-based S&P 500 is tipped to start at 3,807, down 18 points.
The Nasdaq Composite is seen opening its account at around 13,053, down 148 points.
Bond yields have hardened on speculation that the US central bank, the Federal Reserve, will taper off its purchases of bonds this year.
“Bond yields, despite last week’s move above 1% in the US 10 year are still very low, which means in the absence of a viable alternative stocks still look attractive, despite today’s weakness,” observed CMC’s Michael Hewson.
“One other reason for the slightly weaker start to proceedings is an increase in coronavirus cases in China, which has thus far managed to avoid a second wave of infections, and where the economy is looking fairly resilient. If the virus regains a foothold here, as Chinese authorities impose new regional restrictions, that could well act as a brake on recent economic activity,” he added,
Meanwhile, the clock ticks down on President Trump’s sojourn in the White House. It is due to end on January 20, assuming they can winkle him out that apparently is not soon enough for some Democrat politicians, who are reportedly going to introduce an article of impeachment today seeking to charge President Trump with “incitement of insurrection”.
The House of Representatives could vote to impeach Trump on Wednesday; if it does, it would make Trump the first president to be impeached twice.
It all seems a bit pointless – notwithstanding the fact Trump presumably still has the authority to blow us all to kingdom come – from a practical standpoint but would send some sort of signal.
“The Democrats are moving to try and impeach Donald Trump before Joe Biden’s inauguration on January 20th and while that won’t have too much of an effect on actual governance – something Trump hasn’t been interested in since November anyway – it is indicative of an unstable, and potentially violent, few months in America,” suggested Connor Campbell at Spreadex.
Four things to watch for on Monday:
- There are few mid-cap earnings reports due on Monday including fourth quarter figures from IT firm SYNNEX Corp (NYSE:SNX) and first quarter numbers from Commercial Metals Co (NYSE:CMC) and science software firm Simulations Plus Inc (NASDAQ:SLP)
- Bitcoin will also be back in focus after the crypto fell sharply overnight and UK regulators warned investors could see themselves lose all of the money they invest in cryptocurrency and other digital assets
- Investors will also be taking an interest in the dollar, which has been strengthening at the start of the week in a sign traders may be getting jumpy amid the ongoing political instability in the US
- There is little in the macro diary, although some investors may be interested in the US consumer inflation expectations data for December
Story by ProactiveInvestors
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