European Markets Tick Higher, US Futures Follow Suit

01 Feb 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • Global markets rise amid increased optimism
  • Silver price boosted by retail buying

Optimism Circulates Markets

Optimism characterizes this week’s kick-off after losses across the board painted last week’s performance. A sense of a “buy-the-dip mentality” has spread over European markets as all main indexes are in the green this morning. The German DAX is up over 1.00%, while the CAC40 and the FTSE100 are also hovering near 1.00% gains in the initial hours of European trading.

Risk assets seem to be favored by traders and investors early in the week as US futures also point to a higher open later when US traders enter the market. Dow futures, S&P futures, and Nasdaq futures so far point to a higher open by about 1.00% each. Last week, the stock market saw its worse week since October when on Friday, the same benchmark indexes closed lower by about 2.00% each as investors became increasingly worried about retail speculation in single stocks.

Reddit-inspired speculators continue to be in the spotlight this week. The focus this morning is on the silver market. Investors see substantial gains as the metal is now up over 8.00%, gravitating towards $30. The rally, boosted by the retail investors’ movement, shot up the price of silver from below $26 to over $30 in a few hours since the Asian session began. The retail trading crowd is now set to short squeeze the silver market. The latest retail frenzy in silver is an attempt to take on large banks that hold short positions in the metal. Here, however, retail traders, face a very different scenario to the GameStop one. The futures market in silver trades $11bn a day, while the whole silver market is worth over $1.5tn. In mid-January, GameStop was worth around $1.5bn, making it a relatively easy target for speculation.

Alternative US Aid Package Proposed

Heading over to Washington, a group of Republican Senators has drafted an alternative Covid-19 relief plan. The proposal, to be presented to President Joe Biden, is less than a third of the size of the President’s relief package. The Republicans stated that their plan of $600bn is more targeted. The package offers smaller individual aid and excludes raising the minimum wage. Mr. Biden is not likely to approve the package and he has also indicated that he can pass his $1.9tn fiscal relief without bipartisan support.

Earnings season continues this week as investors will hear more from the tech world, which so far has produced more than satisfactory results amid the global pandemic. Google-parent Alphabet will report its earnings for the fourth quarter on Tuesday. The tech giant is expected to land above $50bn in sales, buoyed by increased ad spending during the holidays. Jeff Bezos’ Amazon also releases its figures on the same day after the closing bell. The eCommerce company is betting on sales aided by lockdowns across the globe.

Other companies that are in the investors’ crosshairs and are also set to report this week include Pfizer, ExxonMobil, on Tuesday, PayPal, Siemens, on Wednesday, T-Mobile, on Thursday. Equally important, the market remains focused on the ongoing battle between Wall Street and the retail trading crowd. GameStop, the stock that ignited the clash, points to the upside in pre-market trading on Monday.

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