Opening Bell: Futures Retreat After China Market Crash; Bitcoin Slips
Investing.com | Feb 03, 2020 12:33
Key Events
U.S. futures are attempting a comeback this morning, though the effort looks like it might be fizzling. Contracts for the S&P 500, Dow Jones and NASDAQ, along with European shares have given up earlier gains to start the trading week, edging lower.
The declines signal the likely extension of Friday’s equity selloff, after China's markets crashed on Monday, when traders returned after an extended holiday hiatus, the result of government efforts to contain the coronavirus which continues to spread.
Treasurys trimmed losses, while gold was pressured by a strengthening dollar. The Japanese yen gained.
h2 Global Financial Affairs/h2Contracts on the four main U.S. indices pared daily gains after attempting to recoup some of Friday’s losses after all of January's gains were wiped out at the close of last week's final day of trade. The drop was a result of escalating investor fears the viral epidemic would continue spreading, undermining global growth and weighing on global markets.
Though media outlets are saying investors have shifted gears, we believe these advances are nothing more than a technical pullback before the next leg down in the selloff.
S&P 500 futures are retesting a bearish flag since they've been unable to climb back into it. The STOXX Europe 600 Index also slipped from an advance with technology and travel firms to a small retreat.
Earlier, China’s Shanghai Composite dropped as much as 8.73% percent, closing down 7.72%, its lowest level since February.
From a technical perspective, the index blew out a H&S bottom. The powerful reversal may likely cause a chain reaction in market mechanics, forcing traders in the opposite direction of what was expected to be a bullish pattern. The Asian benchmark curtailed losses by a whole percent after new fiscal support measures were announced by the Chinese central bank.
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Yields, including for the 10-year Treasury note, have rebounded from Friday’s 1.505, the lowest since the Sept. 3 bottom, when it hit 1.462, the lowest point since July 29, 2016.
From a technical standpoint, yields are struggling with the downtrend line since the November 2018 top, as the 50 DMA falls away from the 200 DMA after a short stint of pretending to trigger a golden cross, a very bearish signal.
The dollar rebounded against the yen, finding support by the 200 DMA, above the uptrend line since the late-Aug bottom. The stronger dollar weighed on gold, wiping out the precious metal's Friday gains.
Bitcoin has been consolidating after adding $1,046 in three days, a jump of 12.5%. It formed a classic bullish flag, right by the October-November highs. WTI Daily ChartOil rebounded from its lowest levels since August, precisely at our red line. Meanwhile, China’s demand for the commodity has plunged by 20%.
h2 Up Ahead/h2- Friday brings the U.S. employment report for January.
- Futures on the S&P 500 Index increased 0.4%.
- NASDAQ 100 Index futures gained 0.6%.
- The Stoxx Europe 600 Index edged up 0.1%.
- TheMSCI All-Country World Equity Index decreased 0.2%.
- The MSCI Emerging Markets Index sank 0.7%.
- The yield on 10-year Treasuries climbed two basis points to 1.53%.
- Germany’s 10-year yield was steady at -0.44%.
- Britain’s 10-year yield fell one basis point to 0.518%.
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