· Dow futures point to opening surge of more than 700 points after Trump floats payroll tax cut
Stock futures rose early Tuesday morning after the S&P 500′s worst day since the financial crisis.
As of 12:49 a.m. ET Tuesday, futures on the Dow Jones Industrial Average gained 669 points, indicating an opening jump of more than 710 points on Tuesday. S&P 500 futures and Nasdaq-100 futures also pointed to a higher open for the two indexes on Tuesday. Earlier in the session, Dow futures were down more than 400 points.
Stock futures erased big losses and turned positive after President Donald Trump floated the idea of “a payroll tax cut or relief” to offset the negative impact from the coronavirus. The potential tax incentives come on top of an $8.3 billion spending package Trump signed last month.
· The S&P 500 broke down on Friday to test the 2900 level. This is a market that looks extraordinarily bleak, and it’s possible that we will see a further breakdown. By breaking down below the hammer from a couple of weeks ago at the lows, then the market is likely to go down to the 2700 level. All things being equal, we could get a short-term bounce, but I think that the 200 day EMA has proven itself to be a bit of a concern, as we have pulled back from that technical indicator several times.
With this, I suppose that we will continue to see a lot of volatility going forward but I think that the easiest trade is going to be fading short-term rallies. Any signs of exhaustion will be jumped upon by traders, as we continue to worry about the coronavirus crushing global trade and demand for most things. After all, crude oil markets have broken down rather significantly as well, and that’s a sign of the week global growth. We are starting to price and the idea of a recession globally, and that has continued to cause major issues when it comes to stock indices not only in the United States but other places as well.
Longer-term traders will probably look at the 2500 level as a strong area of support as well, so any type of bounce is probably a buying opportunity. The market breaking above the recent highs would give us more of a “buy-and-hold” type of scenario, but that’s something I expect to see anytime soon. Ultimately, this is a market that looks as if it is trying to build a bit of a bearish flag, which would be a major breakdown just waiting to happen. I see it more in the NASDAQ 100 truth be told, but if that market unwinds, it’s hard to believe that this market won’t.
We did bounce slightly, but in the big scheme of things it wasn’t much to get excited about, and could even be due to short covering more than anything else, not something to set up a trade in. At this point, I think a lot of back and forth is probably in order, and as a result short-term range bound trades could be had, but I think beyond that you are probably better off to stay away from this market until a little bit more clarity comes back into play.
· Asian shares bounced and bond yields rose from historic lows on Tuesday as speculation of coordinated stimulus from global central banks and governments calmed panic selling.
Yields on benchmark U.S. 10-year Treasury debt more than doubled to 0.70% and oil prices rallied over 7%, offering hope that markets had found a floor, even just fleetingly.
MSCI’s broadest index of Asia-Pacific shares outside Japan jumped nearly 1%, having shed more than 5% on Monday. Australia rose 0.9% as some went hunting for bargains in beaten down stocks. Japan’s Nikkei eased 0.3%, but was well above early lows. [.T]
· Japanese shares rose on Tuesday after Prime Minister Shinzo Abe said his government would work closely with the central bank to boost the economy.
"Markets are making nervous movements amid uncertainty over the global economic outlook," said Mr Abe.
His comments put pressure on the Bank of Japan to act on a pledge it made last week to support markets.
In Japan, the Nikkei 225 bounced back strongly from its earlier drop as it rose 1.07% in afternoon trade while the Topix index rose 1.65%. The two indexes had declined more than 3% each earlier in the session.
· Chinese shares closed higher on Tuesday as new coronavirus cases in the mainland tumbled and as President Xi Jinping’s visit to the virus’ epicenter lifted sentiment, while weak data raised hopes for more policy measures to support the economy.
The Shanghai Composite index ended 1.82% higher at 2,996.76 after swinging between losses and gains earlier in the session. Despite the gains, the index remains down more than 2.5% from last week’s highs. ** The blue-chip CSI300 index was up 2.14%, with its financial sector sub-index higher by 1.66%, the consumer staples sector up 2.32%, the real estate index up 1.2% and the healthcare sub-index up 0.67%
· European markets opened higher Tuesday after stocks on Wall Street saw their worst day since the 2008 financial crisis in the previous trading session.
The pan-European Stoxx 600 jumped 1.3% in early trade, oil and gas stocks recovering 3.4% to lead gains as all sectors and major bourses entered positive territory.
Reference: Reuters,CNBC, Daily Forex
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