Opening Bell: U.S. Futures Build On Wall Street Record Highs; WTI Pops
Investing.com | Feb 06, 2020 12:15
U.S. index futures for the Dow Jones, S&P 500 and NASDAQ, as well as European stocks, all advanced this morning after Asian markets jumped, fueled by news that China will cut tariffs on $75 billion of U.S.-made imports. The reduction in duties helped investors see some light amid the darkness in sentiment caused by the coronavirus outbreak since January, whose economic cost is rising, even as the number of fatalities from the flu-like illness increased to more than 560, with over 28,000 people infected.
Treasurys and the yen extended a selloff, while gold moved higher, even against a strengthening dollar.
h2 Global Financial Affairs/h2Beijing's announcement that it will slice tariffs on American goods by half—from 10% to 5% on some items and from 5% to 2.5% on a variety of other imports—spurred a fourth day of advances for contracts on the four main U.S. benchmarks, building on yesterday’s fresh records for the S&P 500 and NASDAQ. The Dow Jones Industrial Average, for its part, closed just 0.2% below its own record close.
Dow futures suggest the underlying index will notch another record today; they are not only sitting above the previous highest close for the index, but are even positioned above the previous intraday high. The MACD and RSI give it room to keep accelerating.
Evidence the world’s two largest economies are stepping back from a ferocious trade war that lasted almost two years boosted every sector of the STOXX Europe 600 Index, pushing the gauge to a fresh peak.
While the MACD and RSI indicate plenty of room before the pan-European index hits the wall of an overbought resistance, the rising gap with the small real body that stumbled away from the session’s high might be trading within an Island Reversal, or at least a Japanese Evening Star.
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On Thursday in Asia, stocks soared. South Korea’s KOSPI outperformed, (+2.88%). The only major regional index that didn't add more than 2% of value was China’s Shanghai Composite though it came relatively close, (+1.72).
Yesterday, American equities climbed after news of a vaccine for the coronavirus was reported; even after the World Health Organization (WHO) clarified that there aren't any known antidotes, market momentum kept building. It was yet another in a long series of examples—including whipsawing around possible Fed rate decisions and the repeated market gyrations triggered by trade-war ups and downs—of how investors continue to be willing to accept any explanation, no matter how feeble, as long as there's a supply of cheap money and the bulls keep running.
Yields, including for the U.S. 10-year Treasury note, climbed for the fifth session, moving toward the top of a falling channel, after breaking to the bottom of a rising channel.
While the MACD triggered a bullish signal (bearish for Treasurys), the MACD has been providing a negative divergence since November, even as the momentum indicator leaves significant room before an overbought condition could occur.
While oil has bounced back above the $50 key support since June, and both the MACD and RSI provide an excellent setup for a rally, the price is struggling against the top of a narrow falling channel since the June 8 high.
h2 Up Ahead/h2- Australia’s central bank chief Philip Lowe speaks and takes questions in front of a parliamentary committee.
- German industrial production figures are due on Friday.
- The U.S. employment report for January is set for Friday release.
- Futures on the S&P 500 Index climbed 0.5%.
- The Stoxx Europe 600 Index increased 0.6%.
- The MSCI Asia Pacific Index climbed 1.8%.
- The MSCI Emerging Markets Index gained 1.4%.
- The Dollar Index fluctuated around 0.05%.
- The euro was little changed at $1.1002.
- The British pound slumped 0.1% to $1.2985.
- The onshore yuan rose 0.1% to 6.97 per dollar.
- The Japanese yen declined 0.1% to 109.90 per dollar.
- The yield on 10-year Treasuries rose one basis point to 1.66%.
- The yield on 2-year Treasuries gained one basis point to 1.45%.
- Germany’s 10-year yield increased one basis point to -0.35%.
- Britain’s 10-year yield climbed less than one basis point to 0.617%.
- Japan’s 10-year yield gained two basis points to -0.017%.
- West Texas Intermediate crude gained 1.9% to $51.71 a barrel.
- Brent crude increased 1.3% to $56.01 a barrel.
- Gold climbed 0.2% to $1,559.72 an ounce.
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