U.S. Stocks Set To Open Higher As Economies Start To Reopen

The Market Is Optimistic As Many Countries Start Lifting Virus Containment Measures

S&P 500 futures are pointing to gains of about 1% in premarket trading as investors cheer news about reopening of the world economies.

Italy, Spain, Germany, New Zealand, Israel and other countries have started to lift some of the virus containment measures that have put immense pressure on the world economy.

In the U.S., certain states have also moved to eliminate certain lockdown measures. The virus situation in the U.S. is stabilizing, but the country will soon cross the 1 million coronavirus cases mark, according to data from Johns Hopkins University.

There are no important economic news scheduled for today so the market will have a positive news background for the whole trading day.

Oil Continues To Fall

WTI oil, which visited the negative territory last week but then rebounded, is experiencing material downside once again. June 2020 futures are currently trading below $13.00.

So far, the oil price downside in the near-term contracts have not hurt major oil stocks like Exxon Mobil, Chevron, Royal Dutch Shell, BP, Total. However, the continued negative trend in the oil market threatens both oil-related stocks and the general market itself since the fall of investments in the oil industry will put pressure on many suppliers across different industries.

In absence of material economic data scheduled for release on Monday, oil price downside is the main risk for the otherwise optimistic market.

More Stimulus Ahead

Monetary stimulus from central banks and governments is the main reason for the current market rally. At this point, it looks like there are no limits to stimulus, and we get updates on new measures almost on a daily basis.

Bank of Japan decided to buy an unlimited amount of bonds in order to keep interest rates low. Currently, the yield on Japan’s ten-year bonds is close to zero, and the bank wants it to stay at this low level.

In Europe, the market is waiting for European Central Bank to raise its bond purchases. The spread between the German bond yield and the Italy bond yield has become significant, so market participants speculate that ECB will increase debt purchases to calm down markets.

Monetary stimulus in other countries is bullish for U.S. equities since it helps their economies and, therefore, U.S. international companies which operate in these countries.