Opening Bell: Equities, Safe Havens Send Conflicting Risk Signals; USD Gains


  • U.S. futures and European stocks hitting all-time highs
  • Yields slightly higher, USD and CHF gain
  • Oil continues to slip
  • Key Events

    In marked contrast to yesterday’s trading, this morning U.S. futures, including for the , and , along with European stocks all surged to new highs. Shares in Asia, including those listed on Chinese indices, rebounded from an extended sell-off after reports emerged that China was taking steps to reign in the spread of yesterday’s major market headwind, the pneumonia-like coronavirus.

    Nevertheless, investors appear to remain unsure of the longer-term risks. Safe havens including yields, the U.S. dollar and the Swiss franc are also rising, signaling discord among market participants.

    Global Financial Affairs

    Traders enjoyed a buying dip yesterday as U.S equity futures slumped after markets were rattled by the coronavirus. But risk appetite for equities returned today, suggesting additional new mileposts ahead for the and , with the closing in on its own new record.

    Utilities shares and media firms helped push the Index higher on Wednesday, so that it carved out its own new record, following gains seen in Asian stocks .

    South Korea’s surged, (+1.23%), on what investors considered a bargain-buying opportunity after yesteday’s slump. Though China’s lagged the regional gains, (+0.27%), the index still had an impressive recovery. The gauge closed up 1.81% from its intraday low, Asia’s biggest intraday gainer among the regional primary indices.

    SSEC Daily

    Technically, the violated gap of Jan. 2 proves a resistance (red line) that’s also acting as a neckline of a small H&S top. Finally, the price was unable to climb back above its violated uptrend line since the Dec. 2 bottom.

    UST 10-Y Daily

    UST 10-Y Daily

    Despite what seems to be the return of vociferous risk appetite, yields, including for the U.S. Treasury, only climbed slightly. Technically, rates remained below the 100 DMA, after finding resistance by the 200 DMA, while staying near the bottom of a rising channel since the Sept. 3 bottom that has been struggling against the downtrend since the November 2018 high.

    DXY Daily

    The reached the highest since Dec. 20. Technically, traders are waiting for a resolution of the conflict between the short-term uptrend since the Dec. 31 bottom and the downtrend since the Oct. 1 high. The 200 DMA seems to be the “red line” for bears and bulls, as they do battle at the top of the falling channel.

    USD/JPY Daily

    The weakened, though as of this writing it’s well off the session lows. Nevertheless, the USD/JPY remains near its weakest levels since May with the currency pair trading within a rising channel.

    The most traditional safe haven, , is currently flat.

    was down for a second day amid a global glut, offsetting concerns of supply disruption from Libya. Some analysts are targeting additional losses for the commodity, on coronavirus concerns.

    Oil Daily

    Technically, oil extended a selloff below its uptrend line since early October. After falling below the 50 DMA for the first time since November, WTI still found support above both the 100 and 200 DMA, whose break would signal a continued decline.

    Up Ahead

    • Companies including Procter & Gamble (NYSE:), Johnson & Johnson (NYSE:), Texas Instruments (NASDAQ:) and Intel (NASDAQ:) all report earnings results this week.
    • Interest rate decisions are due in upcoming days from central banks in , and the .
    • The , the annual gathering of global leaders in politics, business and culture, continues in Davos, Switzerland.

    Market Moves

    Stocks

    • The Index climbed 0.2%.
    • Switzerland’s gained 0.5%.
    • Futures on the S&P 500 increased 0.4%.
    • NASDAQ 100 Futures jumped 0.7%.
    • The increased 0.6% to 173.57.

    Currencies

  • The gained 0.4% to 97.57.
  • The was little changed at $1.3045.
  • The was little changed at $1.1078.
  • The Japanese yen weakened 0.1% to 109.98 per dollar.
  • The advanced 0.3% to $0.9712.
  • Bonds

    • The yield on 10-year Treasuries advanced one basis point to 1.78%.
    • Germany’s yield gained less than one basis point to -0.25%.
    • Britain’s yield climbed less than one basis point to 0.633%.
    • Japan’s yield dipped less than one basis point to 0.002%.

    Commodities

  • West Texas Intermediate crude fell 0.7% to $57.96 a barrel.
  • Gold weakened 0.2% to $1,554.67 an ounce.
  • LME gained 0.8% to $13,770 per metric ton.


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