S&P 500 futures suggest that the cash market will have another shot to firmly break above the 200-day moving average and the 3,000 level
The market is turning risk-on again as stocks get a lift from the European Commission proposal, in which they reportedly outlined €750 billion (more than the Franco-German proposal of €500 billion) to aid member states in dealing with the fallout from the virus outbreak.
Not only that, they are said to have proposed a compromise of €500 billion in grants and €250 billion in loans - to try and resolve the gap between France, Germany and the "frugals".
The initial reaction has been more favourable as we see equities march higher and the euro also firming above the 1.1000 level currently. Meanwhile, the dollar and yen have both been caught out by the news and are dragged to session lows now.
For risk trades, this has more significant implications for the S&P 500 after the setback in late trading yesterday. Buyers now have another shot at breaking above the 200-day moving average and the 3,000 level in trading later today:
From a technical perspective, that could set off another leg higher in risk trades if we do see the key levels mentioned give way in trading today.
As for the reaction to the European Commission news, it may not work out so straightforward in the coming days/weeks. Sure, there is a good reception to the proposal in the near-term but there is likely still going to be plenty of push and pull on the issue.
So, just watch out for that as we move along in the coming days/weeks.
