US stocks set for record open as US500 closes in on 3200

Summary:

• US indices in risk-on mood

• Benchmarks set to open at highest ever level

• US500 moves within 15 pts of 3200

The long awaited confirmation of a phase one trade deal between the US and China caused a bit of a mixed immediate reaction in the markets, with the failure to roll back more of the existing tariffs taking some of the shine off the agreement. Despite the volatility the US benchmarks still ended last week at record levels and there’s been further gains since with the major indices set to trade at their highest ever opening level this afternoon. 

As the dust settles there’s a growing feeling that we may have witnessed a peak in trade tensions and while the current levies still represent a significant amount of taxes, the momentum seems to have shifted firmly towards further reductions as opposed to additional increases. Of course this could all change in the blink of an eye with just one erratic tweet, but for the time being equities look well placed to build on what has been a good year and the chance of a year-end melt-up has increased. 

With this being the last full trading week of the year it’s not too surprising that it’s fairly light on the economic calendar. Arguably the biggest US data points come this afternoon with the flash manufacturing and flash services PMI due at 2:45PM (GMT) which are expected to come in at 52.6 and 52.0 respectively. 

The US500 continues to move higher with price hitting a new all-time peak in the last couple of hours. An RSI reading of 71.1 is edging into overbought territory but in the absence of any reversal signals the path of least resistance appears to  remain higher. Source: xStation