Please try another search
As European shares followed the lead of yesterday's performance on US markets and opened in the red, US futures on the Dow, S&P, NASDAQ and Russell 2000 advanced in trading on Thursday ahead of the New York open. This divergence is symbolic of the rapidly changing views of traders on the Omicron variant of COVID-19 as well as tightening US monetary policy, and explains why volatility has increased in recent days.
Bitcoin remains under pressure while oil jumped.
Value stocks dominated US futures trading this morning with contracts on the Dow, which lists blue-chip, mega cap stocks, up almost a full percentage point while contracts on the Russell 2000, whose small caps rely on an open economy to thrive, were the second-best performer, up about 0.6%, as of the time of writing.
On the other side of the reflation trade, futures on the tech-heavy NASDAQ 100 lagged, up a mere 0.3%.
Tech's underperformance was even more noticeable in European trading, where it weighed on the STOXX 600 Index, which fell more than 1% amid fluctuations. Travel shares also slumped as traders readjust portfolios for potential additional coronavirus restrictions, as the latest mutation of COVID-19 shows up across the globe, including in Australia, Norway, South Korea and Ireland.
It's interesting to see the pessimism expressed in the European session even when there has been some positive news on the virus front. GlaxoSmithKline (NYSE:GSK) reported its antibody treatment shows signs of effectiveness against Omicron in the early testing stages.
Moreover, the World Health Organization announced vaccines would probably prevent severe cases of the strain. Finally, Australia's chief medical officer said there's no evidence that Omicron is any deadlier than previous variants.
On Wednesday, US traders witnessed the worst back-to-back selloff since October 2020 after the US identified its first case of the new COVID variant. During a wild session which saw high trading volume, the S&P 500 wiped out its early gains in the sharpest reversal since April to close down 1.2%. Sectors most sensitive to an open economy took the biggest hit.
The Russell 2000, home to small cap companies, plunged to close down 1.8%. Airlines, cruise operators and hotels underperformed, as COVID-19 cases nearly doubled in South Africa in one day.
Treasury traders took profits, allowing yields to rally after investors flocked to the haven yesterday, pushing yields on the 30-year note below 1.75%, its lowest since January.
The long bond's yield completed an H&S continuation pattern, suggesting investors' appetite will increase for Treasuries.
The dollar was little changed.
The greenback could develop a falling channel, bullish after the preceding leg up, or an H&S top. This is why it is essential to wait for the pattern completion and see how the breakout goes.
Gold is testing the waters below a rising channel.
If the price closes at these levels, it may signal a change in direction. Yesterday, the yellow metal rallied and the dollar fell on gold's haven status. It seems that investors are now refocusing on the Fed's tightening monetary policy.
Bitcoin edged lower.
However, the crypto token remained above its uptrend line.
Oil rose as many analysts expect OPEC to pause its production increases when it meets. There may also be a technical explanation for the rally.
The price bounced off an uptrend line for the third day in a row, finally able to ratchet enough momentum to create gains, after two days of losses on the heels of the 12% plunge recorded Friday when Omicron first hit the news cycle. However, the price has been falling back to the same trend line, with the lows unable to keep up the pace of the troughs, which increases the risk of a trendline violation.
Looking at the weekly close of the 10-year US Treasury yield, the final yield print this week at 4.30% is the highest weekly closing yield since the 4.47% close in late November...
A rate cut is unlikely for the Reserve Bank of Australia because inflation is still higher than the 2–3% target range. Further RBA decisions are unpredictable—the market awaits the...
Market Overview: S&P 500 Emini FuturesOn the weekly chart, the market has been stalling in the last 3 weeks by trading sideways and S&P 500 Emini is forming an Emini ioi breakout...
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.