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Opening Bell: Futures Up On Economic Optimism, Europe Shares Down

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewMar 25, 2021 09:40AM ET
www.investing.com/analysis/opening-bell-us-futures-up-on-economic-optimism-europe-falls-as-virus-spreads-200569410
Opening Bell: Futures Up On Economic Optimism, Europe Shares Down
By Investing.com (Pinchas Cohen/Investing.com)   |  Mar 25, 2021 09:40AM ET
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  • Positive economic outlook from Powell and Yellen
  • German COVID cases surge
  • China tensions escalate with US and Europe

Key Events

US futures on the Dow, S&P, NASDAQ and Russell 2000 climbed higher in trading ahead of the US session on Thursday after Washington’s upbeat view on the US economic recovery was affirmed by the Biden administration. But stocks in Europe were lower amid uncertainty on the recovery there as coronavirus cases spike in Germany, France and Poland. 

Bitcoin and gold were lower. 

Global Financial Affairs

All four US futures were in the green—in contrast to the European decline after yesterday’s positive outlook from Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen. Both sides of the reflation trade—contracts on the tech heavy-NASDAQ 100 and small caps on the Russell 2000 were outperforming. Value stocks in American domestic firms, however, doubled the gains of growth shares in the biggest tech companies.

The cyclical rotation also reversed in Europe on the news of extended lockdowns and as the EU prepares to block exports of the AstraZeneca (NASDAQ:AZN) vaccine to other countries in favor of its own member states. The STOXX 600 Index edged lower driven by oil and gas and retail stocks, which suffer when people stay at home, and banks, as the ongoing closed economy is expected to ensure rates remain low and financial transactions are reduced.

Investors have been buying German 10-year bunds, pushing yields lower for the fifth day in a row, as it recorded its largest increase in virus cases since Jan. 9.

German 10-year Daily
German 10-year Daily

The yield is on the verge of bottoming out.

Regional woes were exacerbated with another diplomatic crisis. The EU and US sanctioned China on human rights violations and the SEC warned it might delist some of the biggest Chinese firms from US exchanges, driving Chinese tech shares lower.

But the tension is not only between the largest global economies. Sweden's H&M (ST:HMb) stock also declined after Chinese online retailers stopped ordering the retailers products following a social media backlash to the fashion chain's refusal to buy Xinjiang cotton.

Adidas (OTC:ADDYY) was also hit by a Chinese boycott, dropping more than 4%.

ADSGN Daily
ADSGN Daily

Shares in the sports apparel retailer crossed the 200 DMA for the first time since climbing over it in August, threatening a top.

In London, movie-theater chain, Cineworld Group (LON:CINE) slumped 10.5%, after it posted its first annual loss of $3 billion for 2020, and said it will seek approval from shareholders to increase its debt ceiling.

Shares in Asia were mixed after Wednesday's Chinese tech company selloff on Wall Street. Stocks on the CSI 300 and the Hang Seng were in the red, but only slightly, about 0.1% down. Japan’s Nikkei 225 outperformed, rising 1.1%, with paper & pulp, railway & bus and real estate.

On Wednesday, US stocks on both sides of the reflation trade tumbled. In mirror image to today’s futures, the Russell 2000 underperformed, falling 2.35%, while the NASDAQ 100 declined by half, 1.7%.

Still,  American domestic stocks, energy producers, banks and transportation shares all performed better than tech firms, suggesting value stocks had an advantage over growth companies.

Yields on the 10-year Treasury note struggled amid a rebound, during a technically sensitive juncture.

10-year Treasuries Daily
10-year Treasuries Daily

After Wednesday’s down gapping High Wave doji following a long, red candle, having neared the uptrend line, if today’s candle is green and digs deeply into Tuesday’s price action, it will complete an Evening Star.

The dollar extended a rally to its third straight day, or to its fifth out of six days.

Dollar Index Daily
Dollar Index Daily

The recovery confirms the bullish nature of the preceding flag, which strengthened the view for a double bottom, rising out of the falling wedge since the March top.

Gold fell on dollar strength.

Gold Daily
Gold Daily

The yellow metal completed a bearish flag.

Bitcoin investors have received mixed signals over the last few days. Tesla (NASDAQ:TSLA) CEO Elon Musk tweeted that you can now buy a Tesla with Bitcoin, while Ray Dalio, a founding partner of Bridgewater Associates, the world’s largest hedge fund, said there is “good probability” that the cryptocurrency will be outlawed, while Fidelity has applied to start a fund that tracks cryptocurrencies.

Bitcoin Daily
Bitcoin Daily

Meanwhile, Bitcoin hangs on the edge of the technical knife. It found support and has been struggling at the bottom of a bullish flag. 

WTI retreated after a surge during a blockage of the Suez Canal.

WTI Daily
WTI Daily

We expect the decline to be technical, as the resistance of a blown out flag, with the price finding this resistance for the fifth day along side the angle of the failed pattern.

Up Ahead

Market Moves

Stocks

Currencies

  • The Dollar Index rose 0.1% to 92.70
  • The euro was unchanged at $1.1813.
  • The British pound gained 0.1% to $1.3697.
  • The onshore yuan weakened 0.1% to 6.534 per dollar.
  • The Japanese yen weakened 0.4% to 109.12 per dollar.

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 1.62%.
  • The yield on two-year Treasuries decreased less than one basis point to 0.14%.
  • Germany’s 10-year yield dipped one basis point to -0.37%.
  • Japan’s 10-year yield gained one basis point to 0.086%.
  • Britain’s 10-year yield sank two basis points to 0.738%.

Commodities

  • West Texas Intermediate crude declined 1.5% to $60.24 a barrel.
  • Brent crude dipped 1.2% to $63.61 a barrel.
  • Gold weakened 0.1% to $1,733.01 an ounce.
Opening Bell: Futures Up On Economic Optimism, Europe Shares Down
 

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Opening Bell: Futures Up On Economic Optimism, Europe Shares Down

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Comments (15)
Frodo Greenspan
Frodo Greenspan Mar 29, 2021 8:55AM ET
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Another guy who followed art classes, nd trying to predict this market with drawing 👍
Brad Smith
Brad Smith Mar 25, 2021 9:46AM ET
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Thanks for the updates as per usual Pinchas. Seems like oil has been trying to hold on. In the longer term, oil looks like it will continue to firm up.
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 9:46AM ET
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You got it, Brad. I'm betting will retest the Aug highs.
Billy Bilnaad
Billy Bilnaad Mar 25, 2021 8:45AM ET
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What futures are you talking about? Everything is deep red. The sell off continues.
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 8:45AM ET
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I'm talking about the futures before 6 AM when I wrote the article.
Sitaram Prusty
Sitaram Prusty Mar 25, 2021 8:25AM ET
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What is the future of Bitcoin?
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 8:25AM ET
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I don't know.
Dionte Edwards
Dionte Edwards Mar 25, 2021 8:22AM ET
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Smh
Nick Passarella
Nick Passarella Mar 25, 2021 8:11AM ET
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It doesn't look like they are up, nor does it feel like an "UP" kind of day!
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 8:11AM ET
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That was the picture when I wrote it, before 7AM.
En Tel
nooot Mar 25, 2021 8:11AM ET
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Pinchas Cohen so its useless
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 8:11AM ET
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En Tel  If that's how you feel because of a single paragraph about a snapshot in time out of an entire article that discusses the overtall market dynamics and themes, you shouldnt' read the article.
Paudel Babu
DONALD_BIDEN Mar 25, 2021 8:05AM ET
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Where is the future up dude? Joking?
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 8:05AM ET
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When I wrote this, before 7, when it fell.
Raimondas Vaitkevicius
Raimondas Vaitkevicius Mar 25, 2021 7:58AM ET
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after hour futures are down on uncertainty of economy rising corona numbers in europe, rising/faling 10 year treasury yelds . comon people don't be paper hands
Loki Kan
Loki Kan Mar 25, 2021 7:56AM ET
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is this written by a bot?
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 7:56AM ET
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Yes.
Ar Pe
Ar Pe Mar 25, 2021 7:52AM ET
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Do you have to have a reason for every 0.5% move? and it was way down by the time the article was published.
Ar Pe
Ar Pe Mar 25, 2021 7:52AM ET
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lol do you have to have a reason for every 0.5% move? and it was way down by the time the article was published.
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 7:52AM ET
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No you don't. I wrote it before that, what I should think is obvious.
Jenn foster
Jenn foster Mar 25, 2021 7:51AM ET
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pretty much all the information in this article is wrong
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 7:51AM ET
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You're free not to read my artciles any more.
Vernon McDaniel
VMcD62 Mar 25, 2021 7:51AM ET
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It's funny the timing of this article, 7:45 EST. "Futures UP"....take a look....the futures are way down.
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 7:51AM ET
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Do you honestly not think I can tell whether they're up or down??? I've written then when they were up.
Nick Burns
Nick Burns Mar 25, 2021 7:50AM ET
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this was sent out just as futures reached their lowest point Over Night
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 7:50AM ET
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And I wrote this before that.
Nick Burns
Nick Burns Mar 25, 2021 7:50AM ET
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Pinchas Cohen  I know i just thought it was funny timing was all.. and they were
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 7:50AM ET
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Sam Gates
Sam Gates Mar 25, 2021 7:48AM ET
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Futures are not up. Sell off looming . But europe is having issues. One part you got right today bud.
Pinchas Cohen
Pinchas Cohen Mar 25, 2021 7:48AM ET
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Let's take a moment and think about this. Do you not think I can tell whether futures are up or now? When I wrote the artice they were up, bud.
jan novodny
jan novodny Mar 25, 2021 7:48AM ET
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Pinchas Cohen  Now i'm at toilet!
 
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