Opening Bell: Futures, Stocks Wobble On Hope Vs. Despair Merry-Go-Round

Key Events

US futures for the Dow Jones, S&P 500, NASDAQ and Russell 2000 traded lower at Thursday's open, as did European shares, before reversing higher, as the persistent rebound in coronavirus cases continues to weigh on markets, overshadowing the most recent round of stimulus talk by both government and monetary policymakers.

Yields are falling and the dollar is rising. Oil is trading higher after slipping earlier today.

Global Financial Affairs

Contracts on the S&P 500 bounced off session lows. However, technicals still suggest the underlying, S&P 500 index will extend yesterday's decline.

SPX Futures Hourly

The e-mini S&P is developing a shooting star on the hourly chart, increasing the likelihood of a downside breakout of the 3,060 level, topping out and threatening to retest Monday's lows.

The STOXX Europe 600 Index opened in the red this morning and extended the drop, barely limped higher, only to head lower at the time of writing. Travel companies and mining shares were among the laggards.

STOXX 600 Daily

The pan-European index has been struggling to make new highs. Traders are wondering whether the June 8 peak will be retested, and whether the rising channel since the March low is even sustainable. That's especially concerning after bulls almost gave up on Europeans stocks, allowing the index to fall below the rising channel on Monday in daily trading. Indicators are demonstrating a gradual weakening of prices and momentum.

Earlier Thursday, almost all Asian benchmarks were in the red, after Wall Street's volatility on Wednesday when the two final hours of the New York session pushed US stocks into negative territory. Still, as seems to frequently be the case, China’s Shanghai Composite outperformed, (+0.1%), despite the Asian nation being embroiled in a trade war, along with global accusations of a Sino government pandemic coverup and what seems like a second wave of COVID-19 in Beijing,  prompting the government to shut schools and halt flights.

Australia’s ASX 200 lagged, (-0.9%), after the May Unemployment Rate in the land down under came in above 7%; or, as the Australian Bureau of Statistics noted, above 9% if those no longer officially looking for work were also counted. As well, May Employment Change numbers printed significantly worse than anticipated.

Yesterday, the S&P 500 closed lower, (-0.4%), for the first time in four days. Real estate and financial shares led the declines.

The NASDAQ Composite was the only major US index to advance, (+0.15%), thanks to Apple (NASDAQ:AAPL), which hit an all-time high, and Microsoft (NASDAQ:MSFT).

Perhaps investors are searching for a fresh catalyst they can trust amid the merry-go-round of market sentiment that keeps circling between optimism of a speedy economic recovery buttressed by stimulus, which then flips to pessimism when rising coronavirus cases signal the likelihood of more economic pain ahead. Rinse and repeat.

All we know is that market volatility very clearly illustrates this cycle most succinctly:

VIX Monthly 2011-2020

Taking the broader view: even after the strongest rally in years, traders are still betting on further market unease, even without counting the recent spike during the February-March, coronavirus-fueled equity crash, of course. We find that to be both interesting and a significantly dissonant from the V-shaped recovery narrative that continues to perpetuate.

Yields, including for the US 10-year Treasury note, are falling for a second day as increasing demand for bonds attracts more foreign dollar buying.

DXY Daily

This has pushed up the dollar index for the third straight day, the longest winning streak for the USD in over six weeks. Technically, the greenback resumes a rising flag, considered particularly bearish after the plunge that preceded it.

Gold was flat.

Bitcoin headed lower for a second day

BTC/USD Daily

The cryptocurrency is attempting to climb over the neckline of a top for a second time. 

Renewed fears of additional coronavirus escalation weighed on oil prices as markets grapple with how all this will change seasonal patterns that usually see increased activity—and demand—during the summer months.

Oil Daily

The price of WTI was flat as it rebounded from a decline. Technically, selling has been overcoming buying. If this continues, we expect oil to fall toward $35.

Up Ahead

• US weekly Initial Jobless Claims are due out later today. In the past few months more than 40 million Americans have filed for benefits.

Market Moves

Stocks

• Futures on the S&P 500 Index declined 0.3%.
• The Stoxx Europe 600 Index fell 0.4%.
• The MSCI Asia Pacific Index decreased 0.1%.
• The MSCI Emerging Markets Index increased 0.1%.

Currencies

• The Dollar Index increased 0.05%.
• The euro climbed 0.1% to $1.1252.
• The British pound sank 0.1% to $1.2538.
• The onshore yuan strengthened 0.1% to 7.077 per dollar.
• The Japanese yen gained 0.1% to 106.88 per dollar.

Bonds

• The yield on 10-year Treasuries fell three basis points to 0.71%.
• The yield on two-year Treasuries decreased less than one basis point to 0.19%.
• Germany’s 10-year yield dipped less than one basis point to -0.40%.
• Britain’s 10-year yield fell one basis point to 0.177%.
• Japan’s 10-year yield dipped less than one basis point to 0.018%.

Commodities

• West Texas Intermediate crude declined 0.3% to $37.84 a barrel.
• Brent crude was little changed at $40.73 a barrel.
• Gold weakened 0.1% to $1,725.75 an ounce.