Opening Bell: U.S. Futures Trim Records As Tech Rally Fades; USD, Yields Waver

US futures tracked European stocks lower in trading on Thursday, as the tech sector rally faded. Contracts on the Dow, S&P, NASDAQ and Russell 2000 are all slightly in the red ahead of the much anticipated meeting of US policy makers at Jackson Hole, which starts today and is expected to drive the next significant move in markets.

Investors in Treasuries, the dollar, gold and Bitcoin are also treading water ahead of any new information from the Fed on its quantitative easing program.

Global Financial Affairs/h2

After yesterday’s record-breaking day for the S&P 500 and NASDAQ indices during the New York session, both sides of the reflation trade—contracts on the Russell 2000 and NASDAQ 100 are underperforming. Yesterday, cyclical stocks led the market higher while the tech sector lagged.

In line with the Wednesday's US trading, European growth and value sectors underperformed today, with retailers and tech shares dragging the STOXX 600 Index lower. Only media stocks were trading in positive territory.

In China, disappointing corporate results ended a three-day mega technology rally. Hong Kong’s Hang Seng slumped 1%, after live streaming mammoth Kuaishou Technology (HK:1024) and electronics component manufacturer AAC Technologies (HK:2018) missed estimates, each falling over 9%.

This week's rally in Chinese tech came despite no indication of a change in regulatory policy. Rather, discounted prices lured risk-takers back into the market, creating a snowball effect driven by the fear of missing out. In an attempt to sooth investor nerves, Han Wenxiu of China's central financial and economic affairs commission said that the country will promote the welfare of all people and “make the pie bigger and divide it well,” adding there is no agenda to go after one class in society in favor of another.

Treasury yields on the 10-year note pared some of their two-day advance, as investors increased the weight of their bond holdings. Perhaps the move is a hedge amid record highs in stock prices ahead of the Fed's Jackson Hole symposium, which may be when more detail is provided on potentially removing support for bonds.

We can see in the chart how traders are awaiting direction. Will yields complete a H&S bottom, or will they resume along their downtrend, as they are pressed down by a Death Cross?

The dollar too is in a holding pattern.

Will the greenback continue its retreat from its highest levels since October, or will it resume higher after a Golden Cross and complete a massive double bottom?

Gold traders also appear uncertain on what to do.

The price blew out a bullish flag but the decline extended following an Evening Star, which just happened to develop at the top of a falling channel. The 200 DMA reinforced the channel’s sellers' line, and the 50 DMA realigned with the top of the flag.

Bitcoin fell to its lowest level since breaking out of a bullish pennant, supported by the 200 DMA and a rising channel.

The cryptocurrency had rallied on the announcement from PayPal (NASDAQ:PYPL) on Monday that it will allow UK based customers to use cryptocurrencies on its platform.

Oil remains volatile as the demand outlook remains uncertain due to the ongoing spread of the Delta variant of COVID and lockdowns across the globe.

The price found resistance by the 100 DMA within a falling channel. Although the global spread of the pandemic is a concern to oil traders, there are a number of other issues worth paying attention over the coming weeks that could also have an impact on prices.

Up Ahead/h2

• Federal Reserve Chair, Jerome Powell is due to speak from Jackson Hole on Friday.
• On Friday US personal income and spending data is released.
• The PCE price index is published on Friday.

Market Moves/h2

Stocks/h3

• The STOXX 600 fell 0.7%
• Futures on the S&P 500 fell 0.2%
• Futures on the NASDAQ 100 fell 0.3%
• Futures on the Dow Jones Industrial Average fell 0.2%
• The MSCI Asia Pacific Index fell 0.6%
• The MSCI Emerging Markets Index fell 0.7%

Currencies/h3

• The Dollar Index rose 0.1%
• The euro was little changed at $1.1768
• The Japanese yen was little changed at 110.12 per dollar
• The offshore yuan was little changed at 6.4815 per dollar
• The British pound fell 0.1% to $1.3743

Bonds/h3

• The yield on 10-year Treasuries was little changed at 1.34%
• Germany’s 10-year yield was little changed at -0.42%
• Britain’s 10-year yield was little changed at 0.60%

Commodities/h3

• Brent crude fell 0.4% to $71.96 a barrel
• Spot gold fell 0.3% to $1,785.85 an ounce