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Opening Bell: Futures, Global Stocks Extend Rally On V-Shaped Recovery Hopes

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewJun 03, 2020 06:41AM ET
www.investing.com/analysis/opening-bell-futures-global-stocks-extend-rally-on-vshaped-recovery-hopes-200526540
Opening Bell: Futures, Global Stocks Extend Rally On V-Shaped Recovery Hopes
By Investing.com (Pinchas Cohen/Investing.com)   |  Jun 03, 2020 06:41AM ET
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  • The V-shaped recovery narrative persists despite an ongoing pandemic, grim economic data and protests in the US
  • Despite risk-on, yields remian depressed, showing investor concerns linger
  • Gold falls because of its safe haven status

Key Events

US futures for the Dow Jones, S&P 500, NASDAQ and Russell 2000, and global stocks all extended an advance on Wednesday, fueled by increasing chatter of an immediate economic recovery and Tuesday's strong Wall Street performance. As well, Asian indices were all boosted by positive Chinese economic data as markets continue to disregarding a pandemic that keeps spreading as well as dire economic data and social unrest in the US.

Gold is trading lower and the dollar continues to slip. Oil is holding above $36.

Global Financial Affairs

Contracts on the major US indices opened higher this morning, on expectations of a V-shaped recovery despite a lack of progress on a medical solution for COVID-19 and the strong possibility of a second wave in countries that have ended lockdowns,such as Israel and Japan where new cases have spiked.

After S&P 500 futures yesterday broke to the topside of a symmetrical triangle on the four-hour chart, they just kept going.

SPX Futures 4-Hour Chart
SPX Futures 4-Hour Chart

This morning, however, after churning for the last four hours, and with indications from both the MACD and the RSI turning lower, it looks like the index is due for at least a pullback.

The pan-European STOXX 600 Index climbed, buoyed by automobile makers and insurance firms, reaching its highest level since March 6.

In Asia today, South Korea’s KOSPI outperformed, (+2.9%), reaching the highest since Feb. 21, lifted by a third round of fiscal stimulus from Seoul. China’s Shanghai Composite lagged, trading less than 0.1% in the green. After outperforming much of the time despite the brewing trade war with the US, the SSEC ironically underperformed when good economic data was released. Caixin Services PMI jumped to 55.0, into positive growth territory, buttressing the narrative that the worst is behind China, pushing global stocks higher.

Yesterday, during the New York session, US equities advanced for the third day, with wide participation. For every decliner, two stocks advanced, pushing Wall Street benchmarks to their highest since March 4.

Despite the rally, yields, including for the 10-year benchmark Treasury note, remain trapped within a presumably bearish pattern.

UST 10Y Daily
UST 10Y Daily

It could be a symmetrical triangle after a decline or a H&S continuation pattern, after a decline. If investor sentiment were truly risk-on yields would have been sent much higher. The fact that 10-year yields are forming a shooting star at the top of the pattern demonstrates there's still continuous demand for the ultimate safe haven asset.

The dollar selloff extended for a sixth straight day.

DXY Daily
DXY Daily

This after completing a bearish triangle and falling below the 200 DMA, while obliterating an attempt for a rebound following a bullish hammer.

Gold is falling for the second day, despite the USD selloff. It's being pressured by its safe haven status, unlike yields.

Gold Daily
Gold Daily

It’s difficult to say whether the price of the yellow metal has already completed a falling flag (dotted line) or is continuing to develope a larger one. What's certain: trading is developing a symmetrical triangle (red lines), after completing a smaller one (green lines) and a H&S continuation pattern.

Oil is off the session’s high, above $37, at time of writing, but remains above $36 for a second day.

Oil Daily
Oil Daily

Technically, the top of the March 29 falling gap, at $41.28, is a presumed resistance.

Up Ahead

  • In Europe, on Thursday, the ECB is expected to top up its rescue program with an additional 500 billion euros of asset purchases. Anything less than an expansion would be a big shock, Bloomberg Economics said.
  • The much anticipated, monthly U.S. labor market report on Friday will probably show American unemployment soared to 19.5% in May, the highest since the 1930s.

Market Moves

Stocks

Currencies

  • The Dollar Index declined 0.2% or 1.7 for the past five days.
  • The euro gained 0.4% to $1.1215.
  • The British pound jumped 0.4% to $1.2603.
  • The Japanese yen was little changed at 108.66 per dollar.
  • The Indian rupee was little changed at 75.371 per dollar.

Bonds

  • The yield on 10-year Treasuries climbed two basis points to 0.70%.
  • Germany’s 10-year yield increased three basis points to -0.38%.
  • Britain’s 10-year yield climbed two basis points to 0.243%.

Commodities

  • Brent crude gained 1.8% to $40.27 a barrel.
  • Gold weakened 0.3% to $1,722.45 an ounce.
  • LME copper dipped 0.3% to $5,510 per metric ton.
  • Iron ore was little changed at $98.15 per metric ton.
Opening Bell: Futures, Global Stocks Extend Rally On V-Shaped Recovery Hopes
 

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Opening Bell: Futures, Global Stocks Extend Rally On V-Shaped Recovery Hopes

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Comments (11)
Pierpaolo Gentilini
Pierpaolo Gentilini Mar 04, 2021 2:35AM ET
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probabile that "V" shape will Transform Info a bullish "Cup & Handle" with a potential of 250 points
Bob Flippa
Bob Flippa Jun 05, 2020 1:06AM ET
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no hope, no dreams or aspirations, no optimism or exuberance. just plain and simple fraund and manipulation
Dennis Cromwell
Dennis Cromwell Jun 03, 2020 11:37PM ET
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Been following the market for decades.  I have never seen it this insane, even in '99.  Strange times we live in!
Pinchas Cohen
Pinchas Cohen Jun 03, 2020 11:37PM ET
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Indeed. I published a series of articles late 2015, in which I was very bearish. I became a laughingstock.
Camaro Camero
Camaro Jun 03, 2020 9:33AM ET
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The market is nothing but speculation and plenty of money to be made off of rumors while financial facts get ignored!
Boyoung Schang
Boyoung Schang Jun 03, 2020 9:26AM ET
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V shape, really??? I think market is too optimistic. It will be more like W
Hardy S O
GameOfTraders Jun 03, 2020 9:11AM ET
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So what after V shape recovery? All unemployed people will be back to work next day? We have to wait to see when reality and real economy will effect artificial inflated numbers of market.
Jashanpreet Singh
Jashanpreet Singh Jun 03, 2020 8:45AM ET
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& I thought S&P would touch around 3130 levels before a strong Pullback
Etienne Schoen
Etienne Schoen Jun 03, 2020 8:11AM ET
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Stocks hate uncertainty. Here anybody has certainty that there is no chance for a V-shape recovery but a deep recession in front of us. Thus, stock prices must go up! Incertainty down, certainty up - everything else doesn't matter. Skyrockets P/Es - who cares, 20% unemployed - who cares, governments without any flexibility/money - who cares! It's a strong buy, because the FU is certain ...
Ariel Cervantes
Ariel Cervantes Jun 03, 2020 8:11AM ET
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🙄🤣
Chasstan Prichard
Chasstan Prichard Jun 03, 2020 7:45AM ET
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destabilization of the dollar continues, starting to make global currency the safe alternative, except where's the value in that
Pietro Rosato
Pietro Rosato Jun 03, 2020 7:33AM ET
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Didn't everyone learn in ECO101 that optimism, manipulation, and hope are the driving forces of an economy, lmao.
Pinchas Cohen
Pinchas Cohen Jun 03, 2020 7:33AM ET
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ECO101 had very little to do win the real world in the first place, or everyone would be an economist, and we all have to relearn economics in a post QE world.
 
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