Opening Bell: U.S. Futures, Europe Waver As Grim Data Strains Reopen Sentiment

Key Events

US contracts, including for the S&P 500, Dow Jones and NASDAQ, as well as European shares, wavered on Thursday, bucking the bullish Asian trend seen earlier in the morning. Though corporate results for mega cap tech companies have been better than expected, and reports continue to surface that there's apparent progress in combating COVID-19, markets are also being pressured by grim economic data.

There was decidedly good news on the energy front, however: oil futures shot past $18 today.

Global Financial Affairs

After an 11% rally for global stocks—over 31% for American equities—traders are now weighing the frightening economic data alongside the outlook for reopening businesses and hopes for the arrival of a treatment for the coronavirus of which, to date, there are more than 3,200,000 confirmed cases globally. The virus's fatality rate is nearing 228,000, with more than 61,000 dead in the US alone.

After US stocks reached a seven-week high yesterday, futures fluctuated around Wednesday’s closing prices, giving up an early advance. The notable exception: contracts on the NASDAQ advanced more than 0.55%, albeit having pared an initial 1.2% gain. The tech-heavy contract was buoyed by strong results yesterday from Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB) and Tesla (NASDAQ:TSLA).

Tech giants demonstrated they were still profitable, even during the pandemic, boosting the NASDAQ Composite 3.5%. Additional good news from Gilead Sciences (NASDAQ:GILD), which reported that early trials of its antiviral drug remdesivir as a possible treatement for COVID-19 were promising, contributed to the rally as well.

Still, other companies—including earlier today oil major Royal Dutch Shell PLC Class A (LON:RDSa)—have announced dividend cuts. Meanwhile, both US and European data show their economies fell into a recession in the last quarter.

Car manufacturers led the Stoxx Europe 600 Index higher at the open on Thursday, as the pan-European benchmark followed yesterday's Wall Street rally. Société Générale (PA:SOGN) plunged more than 5%, after unexpectedly posting a quarterly loss.

Technically, the price may be forming a rounding bottom, while both the RSI and the MACD are providing positive divergences.

Royal Dutch Shell was down 5.85% after cutting its dividend for the first time since WWII.

In Asia, Australia’s ASX 200 outperformed, (+2.4%), followed closely by Japan’s Nikkei 225 (+2.1%). China’s Shanghai Composite lagged, (+1.3%) lagged. Both Hong Kong and South Korea were closed for a holiday.

Yields, including for the US 10-year Treasury note, edged lower today, ranging for a fourth day.

Technically, the bearish triangle holds up its resistance, for now.

The dollar is flat after swinging between gains and losses at the bottom of an ascending triangle.

The placement of this normally bullish pattern, in the supply-demand chart above, is counterintuitive, as it follows a drop.

Oil contracts jumped over 13% after stockpiles rose less than anticipated.

This was interpreted as a recovery to demand, perhaps a bit of overly positive sentiment ahead of relaxing the lockdown and optimism over a potential treatment for the virus. Still, prices remain severely depressed.

Technically, the price is retesting the Evening Star, a bearish pattern that developed last Thursday through Monday. The three-candle bearish nature of the pattern is compounded by the downtrend line from the Feb. 20 high–while at the $20 level looms the red line, differentiating bulls and bears which is also the March support.

Up Ahead

• The European Central Bank is set to publish its policy decision today, with eurozone business activity surveys and German Ifo at record lows.
• Investors are sure to eye today’s weekly update of US Initial Jobless Claims – already at over 26 million; the White House warned the country's unemployment rate could hit 20%.
• Kraft Heinz (NASDAQ:KHC) is due to report corporate results today before market open; expectations are for $0.54 EPS and $6.1 billion revenue.
• Twitter (NYSE:TWTR) is also scheduled to release earnings today, before the open. Analyst prediction: $0.1 EPS and $791.28 million revenue.
• Gilead’s earnings, expected to post at $159 EPS and $5.46 billion revenue, will be released today after the close, will surely gain extra attention after yesterday's positive information about remdesivir.

Market Moves

Stocks

• Futures on the S&P 500 Index climbed 0.3%.
• The Stoxx Europe 600 Index increased 0.4%.
• The MSCI Asia Pacific Index gained 1.3%.
• The MSCI Emerging Markets Index rose 1.3%.

Currencies

• The Dollar Index was flat.
• The euro rose 0.1% to $1.0884.
• The British pound was little changed at $1.2466.
• The onshore yuan strengthened 0.4% to 7.049 per dollar.
• The Japanese yen was little changed at 106.64 per dollar.

Bonds

• The yield on 10-year Treasuries fell one basis point to 0.62%.
• The yield on two-year Treasuries sank one basis point to 0.19%.
• Germany’s 10-year yield declined less than one basis point to -0.50%.
• Britain’s 10-year yield climbed less than one basis point to 0.287%.
• Japan’s 10-year yield rose less than one basis point to -0.036%.

Commodities

• West Texas Intermediate crude gained 11.8% to $16.84 a barrel.
• Brent crude increased 6.1% to $23.91 a barrel.
• Gold strengthened 0.3% to $1,718.60 an ounce.