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Opening Bell: Futures, Stocks Mixed; Treasuries Rise On Thin Holiday Trade

Published 12/30/2021, 08:40 AM
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  • S&P 500 hits 70th record close 
  • Traders tidy up positions before year-end
  • Key Events

    US futures contracts on the Dow Jones, S&P 500, NASDAQ and Russell 2000, along with global shares, were mixed on Thursday, following another record-setting session on Wall Street amid thin trading volume. The market narrative says investors are adding risk on optimism that the world will be able to avoid additional lockdowns in the new year, since Omicron appears to be a milder-than-expected COVID mutation.

    However, currently, as the most transmissible variant, Omicron still limited rallies. That said, as the 2021 trading year draws to a close, it's clear the year was a very good one for stocks

    Yields retreated after Wednesday's boost and Bitcoin slipped below $47K.

    Global Financial Affairs

    US futures were mixed this morning, with contracts on the Dow outperforming, though at time of publication, NASDAQ futures had shifted into the leadership role. However, after a few sessions when both the NASDAQ and Russell 2000 contracts outperformed, Russell 2000 futures are now slumping.

    As we discussed yesterday, the two benchmarks represent opposite sides of the economic conditions triggered by the pandemic—growth stocks boosted by a stay-at-home environment versus value shares boosted by a reopening economy. However, as we see it, there's no big message here, the current moves are likely nothing more than year-end, portfolio squaring.

    Today's advances come after a relatively flat New York session on Wednesday, but one in which the S&P 500 hit its 70th record closing high.

    On Thursday, the Stoxx Europe 600 Index erased any declines from Wednesday. The pan-European Index also briefly surpassed its Nov. 17 record close during intraday trade. Technology stocks rebounded from yesterday's selloff, as some investors bought the dip, with few on the trade's other side in the year's penultimate session. Healthcare and retail stocks also gained.

    Markets in Germany, Italy, and Spain will be closed on Friday, while French and British exchanges will operate for half a day on the final trading day of the year. Wall Street will be open all day.

    Earlier today, trading in Asia was uneven. Japan's Nikkei declined (-0.4%), as did South Korea's KOSPI (-0.5%). China's Shanghai Composite and Hong Kong's Hang Seng both came back from yesterday's selloff amid China's ongoing overseas IPO scrutiny.

    Treasury yields, including for the 10-year benchmark, retreated after yesterday's blowout.

    UST 10Y Daily

    Rates on the benchmark note broke through the topside of a trading pattern we had expected would cause damage to the downside. This confirmed a double-top, whose neckline was marked naturally by the 200 DMA.

    Now, we'll be maintaining a wait-and-see attitude regarding the validity of these moves which all occurred on thin trading volume. We're wondering if rates will resume the decline from the Oct. 21, 2021 high at the start of 2022.

    The dollar rebounded from earlier losses.

    Dollar Daily

    The greenback climbed back into the bottom of an ascending triangle, whose upside breakout would signal a resumption of the underlying uptrend, as marked by the 50 DMA. 

    Gold dropped for a second day. It's noteworthy that even when the USD was weaker earlier today, so too was the precious metal. Additionally, yesterday, when the dollar slumped, so did gold.

    Gold Daily

    The yellow metal is struggling to remain above the 200 DMA, a natural neckline to a rounding bottom

    Bitcoin appeared to have found its footing earlier, after a two-day slide. 

    BTC/USD Daily

    The recent selloff pushed the cryptocurrency below its 200 DMA, protecting an H&S top. If the bearish pattern completes, it could spell long-term problems for the digital token. As 2021 comes to a close, Bitcoin's performance was good, but a number of other cryptos were better, with some also providing greener opportunities in the asset class.

    Oil retreated but remained above $76 a barrel.

    Oil Daily

    WTI was stuck at the top of a rising flag/wedge. A downside breakout will put the energy commodity on the path to develop a massive top, beginning in March. There are a variety of fundamental price drivers that could impact oil in 2022. 

    Up Ahead

    Market Moves

    Stocks

    Currencies

    Bonds

    • The yield on 10-year Treasuries declined three basis points to 1.52%
    • Germany's 10-year yield fell one basis point to -0.19%
    • Britain's 10-year yield fell three basis points to 0.99%

    Commodities

    • WTI declined 0.69% to $76.09
    • Brent Crude fell 0.4% to $78.90 a barrel
    • Spot gold fell 0.3% to $1,799.86 an ounce

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