Current Futures: Dow +125.00, S&P +14.90, NASDAQ +17.50

European markets and U.S. futures are trading strongly in green territory, even though the Asian markets traded on just average volume. 

The biggest gainers during the overnight session were the commodity stocks, which continued to climb inline with the commodity markets. On the U.K. Ftse, which is packed with commodity stocks, 9 out of the first 10 top gainers were from the raw material sector and each of them grew more than 4%. Moreover, every company on the German Dax and the U.K. Ftse advanced on Monday morning, something not seen lately. 

With today’s gains, the global equity markets hit a seven-month high. Much of the rally of the last few weeks of trading has been fueled by the commodity market, as crude oil led the major commodities higher. commented that investors built long positions in the commodity markets as they anticipate a strong global recovery led by emerging economies such as China and Brazil. Trade Team also said that in May, commodities posted the strongest gains recorded over the last two decades. 

However, despite the apparent bullishness seen in the financial markets, institutional traders are not so optimistic on the global economy, or on the recent rally. According to a recent survey made among 600 institutional investors, including hedge funds and central bankers, less than 20% of the respondents think the current rally is sustainable. Additionally, less than 5% of the respondents think that the economy is going to recover in a V-shape (strong contraction, strong recovery), while 70% consider that the economy will recover in a U or W-shape (sharp contraction, long and slow recovery periods). Trade Team notes that this is not currently reflected in the equity market.  

Overnight, the Japanese Nikkei added 155.25 points (1.63%) to 9,677.75. The Australian S&P/Asx rose 76.30 points (2.00%) to 3,894.40. The U.K. Ftse rose 56.49 points (1.28%) to 4,474.43, while the German Dax added 98.78(2.00%) to 5,039.60

Crude oil for July delivery was recently trading at $67.70 per barrel, higher by $1.40.

Gold for July delivery was recently trading higher by $7.10 to $987.40.

TeamLFB provides forex related market analysis and trade signals