Wall Street started the week on a strong footing, eyes on earnings and geopolitical risks

• DJIA, ended around 131 points, or 0.5%, higher to 27,089.
• S&P 500 was closing the day for a record high.

U.S. benchmarks were ending Monday higher, with the S&P 500 closing down shop for a record high following the corporate earnings which continued to top expectations. The S&P 500 climbed about 16 points, or 0.6%, finishing near 3,039. Meanwhile, the Dow Jones Industrial Average, DJIA, ended around 131 points, or 0.5%, higher to 27,089 and the Nasdaq claimed around 83 points, ending 1%, higher to 8,326. 

The earnings from AT&T T and Spotify Technology SA surprised to the upside, sending both stocks higher and prompting President Trump to Tweet en route to Chicago, hailing the S&P 500’s record intrasession high a “big win” for jobs and 401(k) accounts. Meanwhile, with respect to the US/Sino trade talks, speaking to reporters earlier, Trump said that the talks were moving faster than expected which also contributed to the risk-on start to the week. 

“We are looking probably to be ahead of schedule to sign a very big portion of the China deal, and we’ll call it phase-1 but it’s a very big portion,” Trump said. “That would take care of the farmers. It would take care of some of the other things. It will also take care of a lot of the banking needs,” he added. Trump is seeking a meeting with Chinese President Xi Jinping at the Asia Pacific Economic Cooperation summit in Chile next month.

The week ahead

It is a jam-packed week ahead with plenty of schedule calendar events which will include the Federal Open Markey Committee as well US Nonfarm Payrolls. The Fed is expected to cut rates 25bps, the third consecutive cut. We also get the advance release of US Q3 GDP growth that is forecast to have risen 1.6% saar, down from 2.0% in Q2 and confirming a deceleration in domestic demand.

"Labour market data later in the week are also expected to moderate. Jobs are forecast to have risen 90k in October versus 136k in September according to the Bloomberg consensus, confirming an extension in the deceleration that has been in place this year," analysts at ANZ Bank explained.

Geopolitics in focus

The analysts at ANZ Bank also noted the key geopolitical drivers, commenting, that Financial markets seem encouraged by the future growth outlook and were also encouraged by the Brexit extension until January 31. "Progress in the US-Sino trade talks and the reduced risk of a hard Brexit are buoying sentiment against the backdrop of low inflation and monetary easing. President Trump said that the US and China are ahead of schedule in preparations for signing Phase 1 of the trade agreement."

DJIA levels

The DJIA had made several consecutive bearish closes but the 21-DMA was a strong level of support and downside failures gace rise to a spike to the upside and fesh daily highs and a subsequent break back into the psychological 27000s with a target of 27300 and prior resistance. On the downside, a break below the 50-DMA opens risk to the 26200s and the 200-DMA in the same vicinity.