Opening Bell: Futures Drop On Risk-Off Shift; NASDAQ Posts Death Cross

• US futures drop; European shares waver ahead of Fed minutes release, key G20 summit
• US stocks jump the most in 8 months after dovish Fed spurs speculation on easing rate tightening
• NASDAQ outperforms peers but executes Death Cross
• Treasury yields slide, USD gains ground

Key Events

Futures on the S&P 500, Dow and NASDAQ 100 dropped and European shares gave up earlier gains this morning as multiple headwinds seemed to cloud investor sentiment ahead of a crucial G-20 summit kicking off in Argentina tomorrow. The stakes of the summit are running high, with the meeting between US President Donald Trump and Chinese leader Xi Jinping poised to carry far-reaching implications for global markets.

The STOXX 600 initially climbed, with all sectors in positive territory, after Fed Chair Jerome Powell’s dovish comments on Wednesday boosted market confidence over a slower pace of interest rate tightening. However, the pan-European benchmark later wavered around neutral levels, suggesting market narrative was shifting to risk-off mode.

Earlier, China’s Shanghai Composite (-1.32 percent) and Hong Kong’s Hang Seng (-0.87 percent) turned gains into losses.

Global Financial Affairs

Yesterday, US stocks jumped to the most in eight months closing at the session’s high after Powell said that interest rates are “just below” the range of a neutral policy, suggesting the path to higher borrowing costs will slow down or potentially even pause. Eurodollar futures now show the market is only pricing in an increase of 25 basis points—the equivalent of one rate hike—for next year.

The S&P 500 (+2.3 percent) was pushed higher by Technology shares(+3.5%), while defensive stocks in the Utilities sector (-0.07%) fell out of favor. Technically, prices stopped below the 200 DMA.

Both the Dow Jones Industrial Average (+2.5%) and the Russell 2000 (+2.43%) advanced, showing that the trade narrative was not the main market driver.

NASDAQ Composite Daily Chart

The NASDAQ Composite (+2.95%) outperformed its peers, after a six-week slump. However, it executed a Death Cross, as the 50 DMA crossed below the 200 DMA.

UST 10-year Daily Chart

Meanwhile, the yield on 10-year Treasurys fell toward 3 percent on Powell comments while the dollar rebounded from an earlier decline, revealing a bullish tilt despite speculation of a slower path to higher rates.

The euro ticked higher alongside European government bonds ahead of Italy's bond auction, which will be watched closely today amid the country's ongoing budgetary dispute with Brussels.

The price of WTI fell below the key $50 level for the first time in over a year, after Russian President Vladimir Putin said he's comfortable with current prices, casting doubts over the ability of OPEC + producers to curb supply. An unexpectedly large increase in US crude inventories also impacted prices - though WTI was seen climbing higher by late European morning.

Up Ahead

• Trump and Chinese President Xi Jinping plan to meet at the G-20 meeting of world leaders in Argentina that kicks off on Friday.
• Thursday sees the release of the minutes from the Federal Open Market Committee’s November meeting.

Market Moves

Stocks

• The Stoxx Europe 600 Index increased 0.6 percent, to the highest in more than two weeks.
• Futures on the S&P 500 Index fell 0.1 percent.
• The UK’s FTSE 100 climbed 0.6 percent to the highest level in more than a week.
• Germany’s DAX gained 0.7 percent to the highest in more than two weeks.
• The MSCI Emerging Market Index gained 0.6 percent to the highest level in almost eight weeks.
• The MSCI Asia Pacific Index ticked 0.7 percent higher to the highest level in three weeks on the biggest climb in two weeks.

Currencies

• The Dollar Index is flat, after rebounding from a 0.2 percent decline.
• The euro increased 0.2 percent to $1.1391, the strongest level in a week.
• The British pound rose less than 0.05 percent to $1.283, the strongest level in a week.
• The Japanese yen rose 0.3 percent to 113.29 per dollar, the biggest advance in almost two weeks.

Bonds

• The yield on 10-year Treasuries declined four basis points to 3.02 percent, the lowest level in more than 10 weeks on the largest fall in almost two weeks.
• Germany’s 10-year yield fell one basis point to 0.34 percent, the lowest level in more than 12 weeks.
• Britain’s 10-year yield gave up three basis points to 1.342 percent, the lowest level in more than three months.
• Italy’s 10-year yield fell one basis point to 3.244 percent, the lowest level in two months.

Commodities

• West Texas Intermediate crude climbed 0.5 percent to $50.52 a barrel.
• Gold rose 0.4 percent to $1,226.36 an ounce, the highest level in a week.