ON Wednesday, the S&P 500 closed at a record and wrapped up the first half of 2021 with flying colours. Traders celebrated after a stronger private jobs report, with investors touting further market gains for the second semester.
The S&P 500 closed at 4,297.32 and up more than 15 per cent for the year. Dow Jones Industrial Average was up 0.61 per cent, or 210 points, the Nasdaq was down 0.17 per cent for intra-day trading. Moving into the second semester, we could see some good bullish sentiments in US stock market in July/August following the release of 2Q results of most major blue chips!
In our calculation, the recent announcement of US$1.2 trillion stimulus by US President Joe Biden will probably roll out in mid-August to sustain the bull market and keep the commodities upward. Perhaps, some price swing will only come in October over the fear of inflation and rising deficits.
If you have been following the dollar trend, you might have seen the current support at 90.00 benchmark that has been lifting the greenback. This support level always puts the euro at bay when the dollar bounces amid fear of inflation in the US economy.
However, we have reiterated many times that the taking the US dollar in 2H21 is much expected amid the issuance of another new US stimulus.
By tracked record, falling dollar into a new cycle bear trend in past decades has always lifted the gold prices to new fresh high and followed by the silver bull-run.
So will we expect this phenomena behaviour in 2021? Yes, we probably will see the yellow metal tops over the previous high at US$2,070 per pound as we progress into 2022.
Theoretically, if we foresee the US dollar will weaken into the 3Q season, then we might again see the new charting highs in Dow benchmark, S&P 500 and Nasdaq 100 indexes by means of fund rotation.
This is the way how Americans play the game in Capital markets which attracts the largest fund management on their soil.
If you think when the carousel of game will end, we reckon the red button will come soon in 2022 after the game of musical-chair started in 2009. Obama has issued three QE policies and ended his term successfully by a tapering programme.
Trump was forced to print monies only on his final year in the White House due to the impact of covid-19 eruption.
Can Biden sustain his plan in printing monies when the economy has been ballooning into the existing bubbles from the past years?
Let’s watch the situation in 2022.
Dar Wong is a professional in financial industry since 1989. The expressions are solely his own. He can be reached at [email protected]