Major issues that the stock markets will be affected in this trading week
S&P500 index approaches the critical 4,000 resistance. It rose 1.6% last week, it is still up 5.8% since the beginning of the year.
Due to negative factors such as stock sales to balance the positions of funds, leveraged positions-oriented concerns and the re-escalation of the epidemic in Europe, volatility will remain high in this week with limited volumes.
However, beyond these short-term dynamics, it would be reasonable for investors to continue and focus on the level of bond yields (1.7% for 10 years, 0% for 10 years real rates). The direction of the American 10-year and real interest rates will continue to be the main barometer that determines the risk appetite in the markets. It is a dynamic that supports 10-year-olds having difficulty exceeding 1.70% level in the short term and stocks indices in the U.S.
The return of interest in the US treasury’s bond issues, the government’s mobilization of huge support packages one after another, and the FED’s persistent dovish stance, the acceleration of vaccination in the country to the level of 3.5 million per day, and the rapid increase in economic activity with the effect of consumers with a healthy financial situation, and factors such as the effect of this on company profits will support risky assets in decreases.
In addition, in this week, investors should carefully follow China-focused stocks. There has been a serious decline in these kinds of stocks due to many factors such as the increasing pressure of the Chinese government, the tension in the US-China relations, the removal of some Chinese stocks from the American stock markets.
