Opening Bell: U.S. Futures, Europe Shares Extend Rebound But Treasurys Rally
Investing.com | Jan 29, 2020 07:25
U.S. index futures, including for the NASDAQ, S&P 500 and Dow Jones, along with European stocks extended a rebound off the buying dip triggered by fears of a global pandemic, as markets await Wednesday's Fed monetary policy decision and another flurry of U.S. mega cap earnings releases.
Global sovereign bonds, however, also extended their rally, suggesting investors remain jittery about the virus's escalation.
h2 Global Financial Affairs/h2This morning, contracts on all four major U.S. indices—which also includes the Russell 2000—are signaling the underlying gauges will build on yesterday’s advances, after global efforts to combat the epidemic turned Monday's dramatic equity selloff into a buying opportunity, replete with bargains. Markets are now awaiting from big name companies such as Samsung (OTC:SSNLF) and Exxon Mobil (NYSE:XOM) which could experience some serious, virus-related disruptions.
S&P 500 futures extended yesterday’s bounce off the uptrend line since the Oct. 3 bottom, whose significance as a support is underlined by the 50 DMA.
The STOXX Europe 600 Index advanced, driven by bank shares and mining firms.
While most Asian exchanges climbed this morning, Hong Kong’s Hang Seng plunged, (-2.98%), as traders unwound positions after the local holiday. Chinese markets remain closed.
Yesterday, the S&P 500 jumped 1%, as investors flipped from fear to believing their earlier selling was an overreaction. Of course, if the viral outbreak, continues to spread, sentiment could once again reverse. The current risk-on mood occurred after U.S. consumer confidence unexpectedly reached a five-month high in January.
As well, fueling the positive conviction, after the market close, Apple (NASDAQ:AAPL) beat expectations, despite the chaos in China created by the viral outbreak, as the newest iteration of the Cupertino, CA-based company's iconic iPhone made a comeback.
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Yields for the U.S. 10-year Treasury, as well as for other sovereign bonds, headed lower once again, after yesterday's rebound. It seems clear that lingering concerns over the Chinese virus have gone global.
Technically, the yield fell alongside the equity selloff, dropping out of its rising channel since the Sept. 3 bottom. Yesterday it bounced back from below the 1.600 level, after nearing the broken downtrend line since the November 2018 top. The 50 DMA is now moving in sync with the 200 DMA, suggesting anything is possible next.
The dollar moved higher for a sixth straight day, reaching its highest point since Nov. 29. Technically, the short-term uptrend since the Dec. 31 bottom broke free of a falling channel since the October top. Nevertheless, yesterday’s long upper shadow could prove a resistance, which would force a return move.
The yuan resumed a selloff, even though it had temporarily steadied, after the U.S. denied it had requested that China halt all flights to the United States. However, the UK's British Airways have suspended all flights to China, effective immediately.
Technically, the USD/CNY is making an upward correction within a falling channel ahead of a likely death cross.
Bitcoin's advance paused, after a three-day surge helped the cryptocurrency gain 12%.
All this happened once the digital currency completed a H&S bottom, a bullish pennant, whose upside breakout got it through the downtrend line since the late-June top, whose upside breakout turned into a falling flag, which propelled prices above the 200 DMA, to the highest since Nov. 4. The jump, in conjunction with renewed risk-appetite, might propel the cryptocurrency into a return move to retest the 200 DMA, possibly even the flag.
Oil also gained for a second day as sentiment improved. The commodity had already actualized most of its flag’s implied target.
h2 Up Ahead/h2- Wednesday's earnings releases include reports from General Electric (NYSE:GE), Boeing (NYSE:BA), Microsoft (NASDAQ:MSFT) and Facebook (NASDAQ:FB); International Paper (NYSE:IP), Unilever (NYSE:UN), Samsung (KS:005930) and Shell (NYSE:RDSa) report on Thursday. South Korean chip maker SK Hynix (KS:000660), Chevron (NYSE:CVX), Caterpillar (NYSE:CAT) and Exxon Mobil (NYSE:XOM) all release quarterly earnings on Friday.
- Federal Reserve policy makers on Wednesday are expected to open 2020 the same way they closed 2019—by holding rates steady.
- Goldman Sachs (NYSE:GS) will hold its first ever Investor Day on Wednesday in New York City.
- The Bank of England's policy meeting on Thursday is highly anticipated after a series of dovish comments raised speculation the central bank could lower interest rates.
- The U.S. reports fourth quarter GDP on Thursday.
- The UK is scheduled to leave the European Union on Friday.
- The Stoxx Europe 600 Index climbed 0.2%.
- Futures on the S&P 500 rose 0.2%.
- The MSCI All-Country World Equity Index were little changed.
- The UK’s FTSE 100 Index gained 0.1%.
- The yield on 10-year Treasuries decreased two basis points to 1.63%.
- The yield on 2-year Treasuries dipped two basis points to 1.45%.
- Germany’s 10-year yield fell two basis points to -0.36%.
- Britain’s 10-year yield declined two basis points to 0.532%.
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