Investing.com | May 27, 2020 12:09
US contracts for the S&P 500, Dow Jones, Russell 2000 and NASDAQ, along with European equities extended a rally on Wednesday, as markets ignored simmering tensions between the world's two largest economies and instead focused on the reopening of global economies and growing expectations of additional stimulus.
Yields declined as investors shifted into risk assets and oil slipped below $34 at the time of writing.
Futures for all four major US indices were in the green, this morning, each at least +0.7% higher and as much as 2.8% for the Russell 2000, though they were fluctuating, at the time of writing.
Contracts on the SPX struggled above the 200 DMA, for a second day. Dow contracts stopped below the 100 DMA. NASDAQ futures jumped above the 100 DMA, after failing to do so yesterday.
The Stoxx Europe 600 Index opened higher on elevated volume, to the highest level since March 9, as investors eyed the EU recovery plan. The European Commission proposal would recreate growth for Union nations, with grants, loans and guarantees of more than 1 trillion euros.
Asian indices were muted earlier today, as fresh political unrest in Hong Kong added to regional market headwinds, which could include a path to an outright cold war between China and the United States. The Chinese yuan weakened to within 0.3% of its all-time low since September 2019, then the height of the Sino-US trade spat. Considering that accusations by Washington of Beijing's currency manipulation is one of the core issues, this may serve to spread additional salt on the wound.
Hong Kong’s Hang Seng was a drag on regional benchmarks, (-0.6%), after police fired pepper pellets on anti-government protesters angered by additional security legislation proposed by China for the semi-autonomous city. Last year’s unrest hit the Asian financial hub’s economy hard; a repeat would exacerbate the economic damage left by the coronavirus.
Yields, including for the US 10-year Treasury note, declined as more money was routed into stocks.
From a technical perspective, rates have been ascending within a band since the April 21 low and are now above the 50 DMA for a second day.
An ongoing equity rally generally weighs on safe havens, including the Japanese yen.
The USD/JPY is completing a possible small, H&S bottom. Note, the diminishing volume for the pair. A close above the neckline which would include climbing above the major MAs would provide a reason to be bullish.
Gold is testing the neckline of an H&S continuation as well as the symmetrical triangle that followed and, finally, the falling flag.
Should this key level hold, the precious metal would be developing yet a fourth bullish pattern, a larger symmetrical triangle.
Oil slipped below $34, after being unable to conquer the $35 mark for a fifth session.
Technically, the price of crude is depressed below the 100 DMA and losing momentum. It seems the real economy is catching up with the commodity's price, after it soared from negative territory and well beyond, ahead of reopening economies. The price may develop a bullish pennant, but it would be prudent to wait for confirmation of an upside breakout before getting too excited.
There are too many fundamental triggers clouding the picture as to what will happen next, and, more importantly, when.
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
More markets insights, more alerts, more ways to customize assets watchlists only on the App
More content, faster quotes and charts, and a smoother experience is available only on the App.