Opening Bell: Futures, Stocks Up As Investors Reject Virus, Eye Economic Hopes

Faith in the alternative economy, fueled by generous central bank and government stimulus, pushed US futures for the Dow Jones, S&P 500, NASDAQ and Russell 2000 higher on Wednesday, along with the majority of global shares, for a fourth day of gains. Investor confidence in this narrative continues to offset concerns over the state of the real economy, which could take quite some time to recover amid the ongoing increase in COVID-19 cases worldwide.

Yields were flat, the dollar edged lower along with gold and Bitcoin. Oil was little changed.

Futures on the S&P 500 rose once again this morning, rebounding from an earlier decline, as yesterday’s surprise US retail sales print provided justification for bulls to hold on to optimism of a quick economic recovery, despite today's disappointing Japanese trade data.  

Banking shares and automakers boosted the pan-European STOXX 600 Index which has advanced slighty, though it's still stuck below yesterday’s intraday high. It has, however, retreated from the levels of Thursday’s falling gap.

Most Asian indices finished marginally up after a lackluster session. Australia’s ASX 200 outperformed, (+0.8%). The session laggard, Japan’s Nikkei 225, (-0.6%), was pressured by the poor Imports and Exports figures released this morning. South Korea’s KOSPI ended barely higher, (+0.1%), as escalating tensions with its northern neighbor weighed on the regional benchmark.

On Wall Street yesterday, American indices all gained. The mega cap Dow Jones Industrial Average added more than 500 points after Fed Chair Jerome Powell, during testimony before the US Congress, indicated more fiscal stimulus will be required to kickstart a slow recovery.

That may sound completely ironic—investors bidding up stock prices after being told that the actual economy is doing poorly. Nonetheless, we’ve grown accustomed to QE-addicted investors becoming more energetic at the mere suggestion that additional stimulus might be forthcoming.

The 30-component Dow jumped at the open. However, after much sound and fury accompanied by multiple up-and-down swings, the index finished flat, within the resistance provided by the Island Reversal.

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Yields, including for the 10-year benchmark Treasury, snapped back from their recent lows, to hit their highest in a week.

The dollar was little changed

Technically, the USD is trading within a rising flag, bearish after the preceding, steep decline.

Oil is edging higher, rising for a third day.

From a technical perspective, WTI may be forming a H&S top.

h2 Up Ahead/h2

• Fed Chair Jerome Powell delivers the second day of semiannual testimony to Congress, today, in front of the House of Representatives.
• The New York Stock Exchange will allow a limited number of market makers to return to its trading floor on Wednesday.
• Policy decisions from the Bank of England and the Swiss National Bank are due on Thursday.

h2 Market Moves/h2 h3 Stocks/h3

• Futures on the S&P 500 Index climbed 0.2%.
• NASDAQ futures increased 0.3%.
• The Stoxx Europe 600 Index gained 0.3%.
• The MSCI Emerging Markets Index rose 0.2%.

h3 Currencies/h3

• The Bloomberg Dollar Spot Index dipped 0.2%.
• The euro gained 0.2% to $1.1285.
• The British pound was little changed at $1.2569.
• The Japanese yen was flat at 107.31 per dollar.
• The South Korean won weakened 0.6% to 1,213.97 per dollar.

h3 Bonds/h3

• The yield on 10-year Treasuries dipped one basis point to 0.75%.
• The yield on two-year Treasuries fell less than one basis point to 0.20%.
• Germany’s 10-year yield gained five basis points to -0.37%.
• Britain’s 10-year yield climbed less than one basis point to 0.21%.

h3 Commodities/h3

• Brent crude is down 0.83%, to $40.60
• Gold is lower by 0.87%, to $1,721.50