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Opening Bell: Futures, Stocks Jump On Positive Earnings Hopes; Dollar Slumps

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewJul 13, 2020 06:30AM ET
www.investing.com/analysis/opening-bell-futures-stocks-jump-on-positive-earnings-hopes-dollar-slumps-200530490
Opening Bell: Futures, Stocks Jump On Positive Earnings Hopes; Dollar Slumps
By Investing.com (Pinchas Cohen/Investing.com)   |  Jul 13, 2020 06:30AM ET
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  • Investors bet earnings will confirm extraordinary economic data in support of V-shaped recovery
  • Gold continues it upward move
  • WTI falls below $40 ahead of OPEC+ meeting

Key Events

US futures for the S&P 500, Dow Jones, NASDAQ and Russell 2000 all jumped on Monday, as did global stocks. With Q2 earnings season approaching, investors are clearly hoping corporate results will help confirm the better-than-expected economic data, in order, perhaps to 'lock down' the argument for a V-shaped recovery.

The dollar's slide continued as did gold's move higher. Oil hovers around the $40 level, though it's fallen just a bit below at time of writing.

Global Financial Affairs

Contracts on all four of the major US stock indices opened higher today, on optimism that companies managed to acclimate to a world with COVID-19 and still remain profitable, following the strongest quarter for US stocks in decades, as well as economic data that, for the most part, has repeatedly surprised expectations, including a string of records.

We, however, haven't been convinced by all this record-breaking data considering they followed the steepest recession since the 1930s, all of which was triggered by a global pandemic. And that's not in the rear-view mirror yet. 

On Sunday, the World Health Organization reported a record daily increase in global COVID-19 cases. And in the US, Florida hit a new daily record as well with over 15,000 new cases reported yesterday. 

Still, for now, equities and futures continue moving higher. The Stoxx Europe 600 Index rose at the open, fueled by banking shares and travel companies.

Asia was green across the digital board. Japan’s Nikkei 225 led the gains, (+2.2%), as Paper and Pulp, Railway and Bus and Real Estate stocks all climbed higher. China’s Shanghai Composite, (+1.8%), rose ahead of the release of the country’s economic growth data for the second quarter, a key indicator for trade, manufacturing and investments.

US stocks climbed on Friday, despite escalating coronavirus cases and US-China diplomatic fallout, after Gilead Sciences (NASDAQ:GILD) claimed progress toward a potential treatment for the virus, helping the NASDAQ notch its 25th record this year.

UST 10Y Daily
UST 10Y Daily

Despite today's upside gap for US futures and most major global indices, yields, including for the 10-year benchmark note, pared Friday’s gains, perhaps finding resistance by the downtrend line—backed up by the 50 and 100 DMAs—since the June 5 high. From that point, rates have fallen below their uptrend line since April 21.

The dollar dropped for the second day, after it completed a rising flag, bearish following the preceding plunge, putting the currency on course for another leg down within the downtrend.

DXY Daily
DXY Daily

The flag’s implied target places the dollar below the 94.65 low of March 9, suggesting a long-term reversal.

Gold bounced off its uptrend line since June 5, signaling a resumption along its uptrend line.

Gold Daily
Gold Daily

However, weakening indicators improve chances for a pullback before taking on greater heights

Oil has been wavering around the $40 mark ahead of Wednesday's OPEC+ meeting in which the cartel will consider easing its unprecedented production cuts, despite the rising cases of coronavirus weighing on recently reopened economies.

Up Ahead

  • Earnings season begins officially on Tuesday, when the big US banks report: JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) kick off the action.
  • Wednesday brings the Bank of Japan’s policy decision and a briefing by its governor, Haruhiko Kuroda.
  • The EIA's weekly crude oil inventory report is due Wednesday.
  • China releases second quarter GDP on Thursday, as well as key economic indicators for June.
  • The European Central Bank meets on Thursday as well, to set monetary policy. President Christine Lagarde will hold a virtual press conference afterward.

Market Moves

Stocks

Currencies

  • The Dollar Index fell 0.1%.
  • The euro jumped 0.2% to $1.1327.
  • The British pound gained 0.1% to $1.264.
  • The onshore yuan was unchanged at 7.0 per dollar.
  • The Japanese yen was little changed at 106.96 per dollar.

Bonds

  • The yield on 10-year Treasuries sank one basis point to 0.63%.
  • The yield on two-year Treasuries decreased less than one basis point to 0.15%.
  • Germany’s 10-year yield climbed one basis point to -0.46%.
  • Britain’s 10-year yield rose one basis point to 0.166%.
  • Japan’s 10-year yield gained one basis point to 0.033%.

Commodities

  • West Texas Intermediate crude declined 1.1% to $40.11 a barrel.
  • Brent crude dipped 1% to $42.80 a barrel.
  • Gold strengthened 0.5% to $1,807.75 an ounce.
Opening Bell: Futures, Stocks Jump On Positive Earnings Hopes; Dollar Slumps
 

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Opening Bell: Futures, Stocks Jump On Positive Earnings Hopes; Dollar Slumps

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Comments (8)
Jay Khaye
Jay Khaye Jul 14, 2020 7:40PM ET
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"Stocks Jump On Positive Earnings Hopes" Is this considered Analysis by today's Standards?
Erin Redman
Erin Redman Jul 13, 2020 12:58PM ET
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asymtotic
Rob Fordham
Rob Fordham Jul 13, 2020 8:36AM ET
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Nothing to do with earnings its the fed
Pinchas Cohen
Pinchas Cohen Jul 13, 2020 8:36AM ET
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Naturally, QE is the basis, but the current risk-on is on earnings optimism.
Mario tragik
Mario tragik Jul 13, 2020 8:22AM ET
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on positive earnings hopes .. lol. they don't even know how to headline this spikes so they use the word hopes. vaccine hopes, earnings hopes, positive mood hopes. what a joke this is.
Pinchas Cohen
Pinchas Cohen Jul 13, 2020 8:22AM ET
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Thanks for your feedback, Mario.
Lawrenti Berija
Lawrenti Berija Jul 13, 2020 8:22AM ET
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don't just thank him, do it, write the truth.
Pinchas Cohen
Pinchas Cohen Jul 13, 2020 8:22AM ET
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Lawrenti Berija  Thanks for your suggestion. I'll take it under advisement.
niki velev
niki velev Jul 13, 2020 8:09AM ET
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dxy is up not sluding!
niki velev
niki velev Jul 13, 2020 8:09AM ET
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*sliding
Pinchas Cohen
Pinchas Cohen Jul 13, 2020 8:09AM ET
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Nope, it's down.
Matt Kay
Matt Kay Jul 13, 2020 7:57AM ET
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Earnings hopes? Oh boy, will I short these earnings.
Pinchas Cohen
Pinchas Cohen Jul 13, 2020 7:57AM ET
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good luck
Evensy Sam
Evensy Sam Jul 13, 2020 7:49AM ET
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At this point the only thing that would cause the dow to drop is the fed saying they will stop supporting these companies.
Pinchas Cohen
Pinchas Cohen Jul 13, 2020 7:49AM ET
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I think even if they don't. There will come a breaking point where investors will not buy into it.
John Klan
John Klan Jul 13, 2020 7:40AM ET
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Well I you lower expectations enough it really doesn't seem to matter what earnings are these days.
Robert DZ the patterns
Robert DZ the patterns Jul 13, 2020 7:40AM ET
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That's correct, everything is a relative concept.
Pinchas Cohen
Pinchas Cohen Jul 13, 2020 7:40AM ET
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I know what you mean.
 
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