S&P500 Forecast: SPX rises after Biden steps down from election race

US futures

Dow future -0.11% at 40,248

S&P futures 0.97% at 5538

Nasdaq futures 1.15% at 19756

In Europe

FTSE 0.70% at 8197

Dax 1.31% at 18405

Stocks rise after Biden exits the race to the White House
Biden supports VP Kamala Harris
Harris could be a tougher challenge for Trump
Oil falls to a monthly low

Stocks rise after last week’s selloff

U.S. stocks are rising on Monday as the market weighs up the latest developments surrounding the US elections and the odds of a second term as President for Republican nominee Donald Trump.

President Biden announced that he had withdrawn from the presidential election race and instead endorsed his vice president, Kamala Harris, for the Democratic nomination.

The markets were assessing what this means in terms of the likelihood of another Trump administration. With mega caps rising across the board, shares of Trump-linked stocks, such as Trump Media and Technology, also rose.

Whilst Kamala Harris is likely to offer more of a challenge to Trump than Biden in the race for the White House, there is still a significant amount in just three months to boost her chances of a win.

The uncertainty over the democratic nominee is the latest upheaval in the election and comes as investors brace for quarterly earnings from two of the so-called magnificent 7.

In a week that looks like it will have many moving parts, the focus could also be on core PCE, the Federal Reserve's preferred gauge for inflation, and second-quarter GDP for insights into the health of the US economy.

Corporate news

CrowdStrike has opened almost 5% lower, continuing Friday’s steep sell-off. Cyber security firms said that a significant number of the 8.5 million Microsoft devices affected by the global tech outage were back online and operational.

Tesla has risen over 1% higher after CEO Elon Musk said that the EV manufacturer will have humanoid robots for internal use next year.

Nvidia has opened higher on reports that the chipmaker is developing a version of its flagship AI chip for Chinese markets that will fall within the US export restrictions.

Verizon opened 2.5% lower after the telecommunications giant posted disappointing quarterly revenue despite adding more wireless subscribers than expected.

S&P500 forecast – technical analysis.

The S&P 500 has fallen from its all-time high of 5667 breaking below its rising trendline support. Buyers are attempting to rise back above the now resistance at 5560. Should buyers successfully rise above the trendline a rise toward 5670 could be on the cards. Failure to retake the resistance could see sellers test 5525, last weeks low, which could open the door to 5444, the July low.

FX markets – USD flat, GBP/USD unchanged

The USD is flat at the start of the week as the US dollar gives back some gains from the Trump trade of last week and on expectations that the Federal Reserve will cut interest rates in September.

EUR is falling after losses last week, and after the ECB Slovakian central bank governor Peter Kazimir said that the market pricing in two rate cuts by year-end is not entirely misplaced,

GBP/USD is unchanged after losses last week. Investors continue to digest weaker-than-expected UK retail sales data. Investors are also digesting sticky service sector inflation from last week which saw the market push back rate cut expectations to September.

Oil falls to monthly low

Oil prices are falling after booking losses of almost 3% last week.

Oil prices are falling despite the People's Bank of China cutting interest rates in a bid to boost the economy of the world's largest oil importer.

However, concerns that the move wasn't big enough to spark a meaningful recovery I the economy are weighing on oil prices, despite Fed rater cut bets.

Meanwhile, the markets are also weighing up what a second presidency for Trump could mean to the oil market. Joe Biden dropped out of the race and questions are raised over Kamala Harris's ability to win the election.

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