Opening Bell: U.S. Futures, Stocks Rally, Yields Slide As Markets Remain Nervous

• Dip buyers return
• Cheap valuations offset inflation and interest rate worries
• US dollar eases

Key Events

After a sharp selloff yesterday, futures on the Dow Jones, S&P 500, NASDAQ 100 and Russell 2000 as well as European stocks traded higher, bucking a mixed Asian session. Indexes hit new 2022 lows on Monday on persistent worries about inflation and the economic growth outlook. 

Gold rallied benefiting from weakness in the dollar. 

Global Financial Affairs

All four US index futures were at least 1% higher with the NASDAQ and Russell 2000 leading the recovery after both slumped over 4% yesterday.

As of yesterday's close, the NASDAQ was 26.7% off its Nov. 19 record and the Russell 2000 28.1% off its high. The S&P index slumped 16.8% from its Jan. 3 peak and the Dow Jones Industrial Average slipped 12.4% since its Jan. 4 record close.

In Europe, the STOXX 600 Index appeared to find its footing, regaining almost half of yesterday's plunge. However, the pan-European benchmark has a lot to make up if it is to recover from the near 7% loss in the last four sessions amid its steepest slide since June 2020.

STOXX 600 Weekly

A fall below the Mar. 7 trough will establish a long-term peak-trough downtrend.

In London, the FTSE 100 opened higher, but found resistance and could not extend its advance. Leading the charge was Melrose Industries (LON:MRON) which outperformed, jumping 5.5% and Standard Chartered (LON:STAN) which rallied 2.9%.

Utilities and pharmaceuticals—defensive stocks—were among the few sectors that sold off.

Asia was uneven, with Hong Kong's Hang Seng falling 1.84%, driven by a selloff in tech stocks as traders there took their lead from Wall Street's steep tech losses on Monday.

China's Shanghai Composite, which rose over 1%, was the only bright spot in Asia, as traders bought into Beijing's promise to support the ailing economy.

Treasury yields on the 10-year note opened lower, extending their decline to a second day, as bond traders bought into the selloff in a mirror image of today's risk-on.

The dollar slipped from its highest level in 22 years, but then recovered. We consider the decline as a corrective move within an uptrend from a technical perspective.

Dollar Index Daily

The greenback completed a falling flag, bullish after the preceding sharp advance.

Gold found new demand amid dollar weakness, but then slipped. We remain bearish on the yellow metal.

Gold Daily

The price is rising off last week's lows and may advance amid a return move after completing a bearish triangle—symmetrical or descending. What matters is the downside breakout.

Bitcoin slipped, having reached significant technical support.

Bitcoin Weekly

The cryptocurrency has bounced off the lows in January of last year. If breached, the digital currency will have completed a massive top. 

Oil sold off as the market remains volatile. The EU softened proposed sanctions that would deny ships carrying Russian oil passage which provided some respite to traders. Technically, we're bullish on oil.

Oil Daily

The price found support above a bullish triangle.

Up Ahead

• ECB President Christine Lagarde is due to speak on Wednesday. 
• On Wednesday, US CPI figures are released. 
• The EIA crude oil inventories report is published on Wednesday.

Market Moves

Stocks

• The MSCI AC Asia Pacific Index fell 0.8%
• The MSCI Emerging Markets Index fell 0.6%

Currencies

• The offshore yuan fell 0.04% to 6.7517 per dollar
• The British pound rose 0.04% to $1.2326

Bonds

• Germany's 10-year yield slid to 1.04%
• Britain's 10-year yield slipped to 1.86%

Commodities

• Brent crude fell 2.0% to $103.79 a barrel
• Spot gold rose 0.2% to $1,856.96 an ounce