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Important Notice - Fraud awareness
Important Notice - Scam alert
54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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US Stock Bulls return from extended down trend

The US stocks have regained their bullish momentum after being down for the past two weeks following the dollar dominance. The market seems to have gradually returned to a risk-on mode following the weakening of the US dollar index after being unable to break the strong resistance at 105. This gives investors more reasons to diversify their investment in stocks again. 

Positive remarks from the US president during the news conference with Japanese Minister Fumio Kishida stating that his administration is considering easing the tariffs on Chinese goods imposed by Trump. The announcement created a positive environment for investments in the US stock market. 

The majority of the US stocks have been up with massive gains since Monday till the present moment.

A clear indicator that investors are returning to the risk on mode is the recent increase in the US 10- year yield, which rose by 7 basis points to 2.86%. 

Apple up by 4.1%; Tesla has increased by 1.67%; Netflix is up by 1%; Energy Transfer Equity (ET) is up by 1.44%; Walt Disney Company is up by 3.33%; Microsoft is up by 2.97%; Google is up by 2.37%.

On the index, the S&P 500 Index is up by 1.87%, US100 Index is up by 1.68%, and Dow Jones is up by 2%. 

What are the significant factors that affect stock prices?

Three main factors determine when investors are returning to the stock market. They are: 

Market Sentiment

This is an essential factor that influences the stock market. When the risk-on mode is high, the stock market and other risky assets boom again. A risk-off method is when investors are not willing to take risks. It is evident we are gradually returning to the bet on mode again. 

Interest rates

Investors tend to return to less risky assets and buy government bonds when the interest rates are high. However, the recent decline in the dollar index shows investors are returning to the commodity and stock markets. 

US 10-year Treasury Yield

The rise in the 10-year treasury yield has been used by analysts to measure when investors are back in risk-on mode and ready to buy stocks and Commodities. An increase in the US 10-year yield shows investors slowing down purchasing government bonds. 

We can find these three factors present today, which indicate that the current bullish momentum might be prolonged.

Last Updated: 24/05/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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