Dow Jones Forecast: DJIA rises with Trump & Fed Powell in focus

US futures

Dow future 0.47% at 40,200

S&P futures 0.37% at 5637

Nasdaq futures 0.40% at 20427

In Europe

FTSE -0.4% at 8219

Dax -0.61% at 18657

• Odds of Trump winning the election rise
• The market considers a Trump win bullish
• Federal Reserve Chair Jerome Powell speaks later
• Oil falls after weaker China data

Trump’s odds of an election win increase

U.S. stocks point to a higher start as traders assess the implications of an assassination attempt on former U.S. President Donald Trump and ahead of a speech by Federal Reserve chair Jerome Powell later today.

Following the assassination attempt on Trump, expectations have risen that Trump would win the US elections. Online betting site PredictIt showed that the chances of a Trump win rose to 67%, up from Friday's 60% while Joe Biden was at 28%

Under Trump, markets are expected to benefit from a hawkish trade policy and looser regulation, particularly over climate change and cryptocurrency issues. As a result, the market considers Trump as President an optimistic scenario, which explains the move higher.

Today’s gains come after a strong rally that has seen all three major US indexes reach record highs in recent sessions.

Attention will now turn to Federal Reserve chair Jerome Powell, who is due to speak. His comments come after US inflation cooled more than expected in June and as the market prices in 93% probability over 25 basis point rate count by September. A dovish-sounding Powell could help boost stocks.

The US earnings season ramps up this week, with mega caps in focus. Goldman Sachs, Bank of America, Netflix, and TSMC are among those expected to report.

Corporate news

Goldman Sachs is falling despite better-than-expected Q2 results. The banking giant posted an EPS of $8.62 versus the $8.34 forecast for revenue of $12.73 billion versus the $12.46 billion estimated. This marks a 150% jump in profits compared to the same period last year. Revenue rose 17% thanks to growth in the bank’s core trading, advisory, asset, and wealth management operations.

Asset manager BlackRock is set to rise after impressive Q2 results. Its assets reached a record 10.65 trillion, up from 9.43 trillion a year earlier and 10.5 trillion in the first quarter.

Shares in trump media and technology popped more than 50% following the attempted assassination of the former president.

Apple shares are set to open 2% higher after Loop Capital upgraded the tech giant to a buy rating, citing its future AI integration and is. Bloomberg reported the company's sales in India grew 33% yearly.

Dow Jones forecast – technical analysis.

The Dow Jones has risen above 40k to fresh ATHs. Buyers could look towards 41k as the next natural target. The RSI is in overbought territory, so buyers should be cautious. Immediate support is seen at 40k and below at 39,574, the June high.

FX markets – USD flat, GBP/USD rises

The USD is flat, giving back earlier gains as the market digests Trump’s improved election odds after the shooting over the weekend. The U.S. dollar will now look to Powell’s speech for further clues about monetary policy. A dovish Powell could pull the USD index below 104.

EUR/USD is holding steady at 1:09 as the euro recovers from earlier losses and looks ahead to the ECB rate decision later in the week. The ECB is not expected to change interest rates. Instead, the market will focus on clues over when the ECB will cut rates for a second time after lowering rates by 25 basis points in June.

GBP/USD is falling away from the 2024 highs reached last week as investors await UK inflation and labour market data this week. The figures come after British recruiters warned of tough hiring market conditions due to economic and political uncertainties.

Oil falls after weak China data.

Oil prices are edging lower after falling 1.5% in the previous week. This comes after disappointing data from China, which fuels demand outlook concerns.

Chinese GDP was 4.7% in Q2, down from 5.3% in the first quarter of the year and below the 5% expected. Weaker growth in the world's second-largest oil consumer raises concerns about demand outlook. Meanwhile, China data, including refinery runs and crude imports, were not supportive. China's crude imports fell 2.3% in the year's first half.

The move lower comes after crude oil fell last week after four weeks of gains. Optimism surrounding strong US demand countered concerns over China.