DOW Futures Leap on Memorial Day
(Mon, 25 May 2020). The stock market is perfectly tracking the rise of global liquidity. In other words, central bank stimulus is still driving this rally higher.
Dow Jones Industrial Average (DJIA) futures push higher while stock markets are shuttered for Memorial Day. The stock market appears to rise in perfect harmony with global money supply, suggesting that central bank stimulus is the single biggest driver right now. Trump begins re-election fight with a promise of 2021 economic boom. Stocks might be closed for Memorial Day, but traders can still flex their muscles on the futures market. And right now, Dow Jones Industrial Average futures are giving us an optimistic sign, up 250 points on Monday.
This leap because central bank liquidity, markets continue to be driven mainly by liquidity. The S&P 500 runs in tandem with the global money supply.
Dow Futures Bounce 250 Points
Dow futures contracts ripped higher on Monday morning amid thin trading volume on Memorial Day. At 6.42 am ET, futures were up 250 points (1.02%). S&P 500 futures and Nasdaq Composite futures were up 0.93% and 0.95% respectively.
Note: U.S. stock markets are closed for Memorial Day today. U.K. stock markets are closed for bank holiday. European markets on the continent remain open.
7 Trillion Reasons Why The Stock Market Is Rising
The U.S. Federal Reserve has pumped almost $3 trillion liquidity into the financial markets over the last two months. Co-head of Swiss and global equities at Union Bancaire Privee, Eleanor Taylor Jolidon says this is the over-riding reason behind the recent market rally.
Chairman Powell has been aggressively buying treasuries, bonds, and mortgage-backed securities to prevent the markets from seizing up. In total, the Federal Reserve balance sheet has ballooned to more than $7 trillion, as of last week.
Powell’s compatriots at the European Central Bank, Bank of Japan, and China central bank have also kept the monetary taps running. This astonishing wave of liquidity has buoyed the stock markets. And it isn’t going to disappear.
Trump Promises A ‘Transition To Greatness’ In 2021
There’s also a slight return to risk-on appetite as Donald Trump begins his re-election campaign. The president has promised a “transition to greatness” in 2021, in what will likely become a repeat campaign slogan. The economy is vital to Trump’s re-election. And while the numbers are currently disastrous, he is expected to focus on the future recovery. The president’s grip on the economy is fading, however. In the latest polls, only 49% of the country approve of Trump’s handling of the economy, down from 56% last month.
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