Opening Bell: U.S. Futures Trim Sharp Selloffs; Oil Up On China Stockpiles
Investing.com | Apr 02, 2020 06:59AM ET
- U.S. contracts sharply higher after 4%+ selloffs Wednesday on Wall Street
- Beijing takes advantage of cheap oil to strengthen reserves
- Trump, Cuomo say U.S. virus outbreak will get worse before it gets better h2 Key Events/h2
- Australia's Retail Sales figures for February will print tonight, and are expected to show an uptick.
- UK Composite and Services PMI will be reported Friday. Both are anticipated to have slipped lower.
- Futures on the S&P 500 Index increased 1.7%.
- The Stoxx Europe 600 Index rose 0.4%.
- The MSCI AC Asia Pacific decreased 0.5%.
- The Dollar Index dipped 0.2%.
- The euro dipped 0.2% to $1.0939.
- The British pound gained 0.3% to $1.2412.
- The Japanese yen fell 0.1% to 107.30 per dollar.
- The yield on 10-year Treasuries climbed two basis points to 0.61%.
- Germany’s 10-year yield rose three basis points to -0.43%.
- Britain’s 10-year yield gained three basis points to 0.344%.
- Gold rose 0.1% to $1,593.54 an ounce.
- West Texas Intermediate crude climbed 9.2% to $22.18 a barrel.
Futures for the Dow, S&P 500 and NASDAQ pushed higher on Thursday along with European shares, surprising after yesterday’s sharp selloffs which provided a rocky start to the quarter.
Oil jumped, boosted by China's plans to increase stockpiles. Still, Treasuries rallied, indicating investors aren't yet ready to fully immerse in risk assets.
h2 Global Financial Affairs/h2After taking a hit during the first three months of 2020, the worst quarter for financial markets since 2008, investors are now weighing their options. Is it better to stay in and not realize sharp losses, or cut and run before stocks fall much lower and corporations stop paying out dividends and halt buybacks?
With COVID-19 still the primary risk factor pressuring global populations and markets—reported cases worldwide are currently above 940,000 and rising, and fatalities now at 47,500+, America is tightening restrictions which could bring the U.S. economy to a halt, possibly for the first time in its history.
With U.S. contracts rising this morning, and European stocks edging higher buoyed by energy shares, it's likely U.S. trade could recover from yesterday's slump.
Earlier Thursday, Asian trading was mixed, with declines in Japan’s Nikkei 225 (-1.37%) and Australia’s ASX 200 (-1.98%) offsetting gains in South Korea’s KOSPI (+2.34).
Wednesday, shares on Wall Street dropped for the third day out of four, on the growing acceptance that the U.S. economy will be shut for longer than initially hoped. Previous national emergencies, such as World War II, lifted the economy, as factories retooled for the war effort, trimming the country's 25% unemployment rate to 10%, practically overnight.
Unfortunately, coronavirus will have the opposite effect: the huge surge in last week's Initial Jobless Claims, and likely today's release as well, along with tomorrow's Nonfarm Payrolls report, will probably be the leading indicators on the job loss front.
All the four major indices in the U.S.—the S&P 500, Dow, NASDAQ and Russell 2000—each dropped at least 4.4% after President Donald Trump warned of a “painful” period ahead. Governor Andrew Cuomo of New York—currently the state hardest hit by the pandemic—said the virus breakout isn't expected to peak before the end of the month. Meaning it’s expected to get exponentially worse, before the curve begins to flatten.
Get The News You Want
The SPX is struggling to remain above its long-term uptrend line since the 2009 bottom. A break below the 2191.86 level will complete a downtrend on a long-term basis.
Yields on the 10-year Treasury rebounded from a decline that took rates to their lowest point since March 9.
Though they bottomed at that time, this current low increases the chances of another stampede into Treasurys, following two back-to-back bearish patterns.
The U.S. dollar climbed for a second day, heading toward the 100.50 mark. Should that occur, it would establish a new uptrend, despite the Fed's best efforts to weaken the safe haven currency. We're waiting to see if it can break out of its five-day congestion.
China is taking advantage of historically low oil prices to bolster its emergency reserves, which lifted oil to an intraday high of $22.50. Still, the commodity settled below $22.
We think it more likely oil is on track to head lower, after completing back-to-back bearish patterns. Still, the price did reach the bottom of what might be a falling channel and did fall about 35% with no meaningful upward correction.
h2 Up Ahead/h2
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.