Opening Bell: Futures, Global Stocks Ignore Wall Street Dip; Gold Price Rebounds
New York (Aug 12) US futures for the Dow Jones, S&P 500, NASDAQ and Russell 2000 pushed higher on Wednesday, and European shares rose, lifted by hopes of additional UK stimulus after poor GDP, showing Britain's economy had entered a recession, and Industrial Production data that was, nonetheless, better than anticipated.
Treasuries extended a selloff and gold found its footing.
Global Financial Affairs
Though Asian indices struggled to break free of the gloom that remained after yesterday's Wall Street rout, triggered by fading hopes for additional US stimulus, ES contracts climbed this morning, breaking free of a range since yesterday’s close of the S&P 500 benchmark.
While both the MACD and RSI bottomed out, contracts on the S&P 500 found resistance by the bottom of a rising channel, in place since Aug. 3, that yesterday failed to keep the price within its boundaries.
The STOXX Europe 600 Index recovered from an initial dip fueled by technology and healthcare shares. However, a jump in telecoms stocks boosted the pan-European index after Switzerland's Sunrise Communications (SIX:SRCG) received a $1 billion takeover offer from UK-based Liberty Global (NASDAQ:LBTYA). Shares of the Swiss company jumped more than 26%.
Trade in Asia was mixed this morning. Hong Kong’s Hang Seng outperformed, (+1.4%), as Chinese funds made record purchases to stabilize the city’s economy after months of civil unrest; a string of high-profile listings of giant tech companies added to the exuberance. China’s Shanghai Composite underperformed for a second session, (-0.6%), as slower growth in bank lending offset a recovery in car sales, as US-Sino diplomatic headwinds continue looming large.
Tuesday, during the New York session, US stocks suddenly dropped in the final two hours of trade as investors locked in profits on some of the Wall Street rally’s biggest winners after Republican Senate Majority Leader Mitch McConnel said a stimulus deal could take weeks to pass.
In the aftermath, the SPX up-ended what could have been an eight-day rally, its longest upswing since the spring of 2019, which took the benchmark to less than 0.4% from its Feb. 19 all-time high.
The late-session selloff completed a double-bearish pattern: a Bearish Engulfing pattern that also confirmed Monday’s hanging man. The RSI curved down from its 70 oversold level. The momentum-based indicator failed to climb above its June high, forming a double negative divergence, including slowing momentum from January 2018. This contrasts with a rising price—along the pattern of its long-term broadening pattern.
Yields, including for the US 10-year Treasury benchmark, climbed for a fourth straight day.
Rates broke free of a downtrend line since June 16, and closed above the 100 DMA, after bouncing off the 50 DMA.
The dollar gave up gains, even after news of the delayed stimulus boosted greenback demand.
Investing.com
