- S&P 500 futures hit limit-up before trimming advance
- Gold continues to derail portfolios, falling for a seventh straight day
- WTI remains below $30
- Bitcoin plunge to continue
Key Events
Futures for the , and wavered this morning, as earlier gains were trimmed after Monday's massive Wall Street selloff, the worst rout since 1987, driven by fears of a coronavirus-triggered global recession. European shares , as investors bought on the dip, but then reversed as the fear of how Covid-19 could damage the global economy returned.
Treasurys and the retreated, while gold extended a drop. The most elevated index at the moment appears to be the , indicating that market turbulance is close to its highest level in two years.
Global Financial Affairs
STOXX 600 Monthly 2005-2020 The rebounded from a 7-year low, finding support by the January 2011 highs. However, it failed to hold onto session highs.
Earlier on Tuesday, contracts for the S&P 500 and NASDAQ surged to their 5% limit-up. The Asian session whipsawed, leaving Australia’s 5.83% higher—its biggest advance since 1997; South Korea’s extended its decline by 2.47%, reaching its lowest point since 2010.
Yesterday, U.S. equities plummeted. The sank 12%, the dropped almost 3,000 points, losing almost 13% of value, after President Donald Trump warned that the virus may disrupt life for months to come and cause a possible recession, after central bank easing didn’t in the economy.
The SPX erased all its 2019 gains and lost almost 30%. The had its worst day on record, diving more than 14%.
Yields for the U.S. note jumped as Treasurys were sold on renewed risk-seeking, after plummeting almost a quarter percentage point on Monday.
From a technical perspective, yields have resumed an H&S top pattern, as , finding resistance by the broken uptrend line, forming the right shoulder, suggesting the current risk-on sentiment won't last.
The has regained almost all of yesterday’s losses. We expect the USD could decline in the short-term with the restart of QE and zero rates. However the global reserve currency will strengthen in the long-term since it's the ultimate safe haven amid a market crash. Either way, the dollar is likely to whipsaw wildly before .
Another traditional haven asset, , fell for a seventh day, slumping below $1,500 and the 200 DMA. The precious metal has bewildered traders, sinking even during the worst stock selloffs in a generation. Likely reason: investors liquidated positions of the yellow metal to margin calls and transactions underlying the contracts disrupted by the global pandemic.
However, the price could find support at an important support-resistance level since June.
has been consolidating, as retail investors seem to be buying while institutions are said to be selling. That’s not a good formula for bulls; institutions tend to have the upper hand in market moves. They have the money and the knowledge.
It's clear how that plays out on the chart. The price has developed a pennant, bearish after the preceding, gut-wrenching 40% dead-drop in a single session.
fluctuated, remaining below $30 for a second day, the first time the commodity has hit this level since 2016.
WTI's continuation pattern appears to have deepened, promising another sharp drop upon a downside breakout.
Up Ahead
- U.S. and headline figures will be released on Tuesday, with a slight declined presumed.
- On Wednesday, the Eurozone publishes data, forecast to remain steady at 1.2%.
- Also on Wednesday, U.S. weekly are released. The metrics are always closely watched, perhaps more so during the current crisis.
Market Moves
Stocks
- Futures on the S&P 500 Index increased 2.3%.
- The Stoxx Europe 600 Index slipped 0.1%.
- The rose 0.3%.
Currencies
- The Dollar Index climbed 0.4%.
- The dipped 0.5% to $1.113.
- The decreased 0.4% to $1.2218.
- The Japanese yen declined 0.8% to 106.70 per dollar.
Bonds
- The yield on 10-year Treasuries increased eight basis points to 0.80%.
- Germany’s yield rose four basis points to -0.42%.
- Britain’s yield climbed five basis points to 0.483%.
Commodities
- West Texas Intermediate crude rose 3.5% to $29.70 a barrel.
- Gold fell 1.9% to $1,485.24 an ounce.
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