Stocks Are Ready To Test New Highs

Markets Start The Year On A Strong Note

S&P 500 futures are gaining ground in premarket trading as traders continue to bet on a strong economic recovery.

Today, traders had a chance to take a look at the final readings of Manufacturing PMI reports for December. In the Euro Area, Manufacturing PMI increased from 53.8 in November to 55.2 in December. In China, Manufacturing PMI declined from 54.9 to 53.0. In the UK, Manufacturing PMI inreased from 55.6 to 57.5. Numbers above 50 show expansion.

The U.S. will provide the final reading of its Manufacturing PMI report after the market open. Analysts expect that Manufacturing PMI will decline from 56.7 to 56.5.

The economic rebound in the manufacturing segment remains strong despite the second wave of coronavirus which is good for stocks.

Oil Traders Wait For Signals From OPEC+

Oil has recently made an attempt to get to the test of the $50 level but failed to get above $49.80 and declined closer to $48.50. Today, OPEC+ members will discuss the current state of the market and outline their production strategy for February.

Yesterday, OPEC Secretary General Mohammad Barkindo noted that the oil market faced many downside risks. If OPEC+ decides to maintain the current size of production cuts in February, oil and oil-related stocks will get additional support.

However, Russia has previously expressed its interest in gradually raising output, and it remains to be seen whether the group will resist the temptation to increase output at a time when oil prices are moving higher.

U.S. Dollar Tests New Lows At The Beginning Of The Year

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has recently tested new lows at 89.42. The U.S. dollar remains under significant pressure as traders bet on a robust recovery and buy riskier currencies.

The falling dollar may serve as an important bullish catalyst for commodity markets, providing material support to oil, gold, silver, copper and other commodities.

Gold has recently managed to get above the psychologically important $1900 level and gained strong upside momentum so gold miners will likely enjoy significant interest during todays trading session.