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Stock Futures Trade Lower, Is It Time To Reload?

Stock Futures Trade Lower, Is It Time To Reload?

European and US futures are trading lower as investors are concerned about the new variant of coronavirus. If the coronavirus mutation has occurred, it could really derail all the economic recovery that we have seen.

Travel and leisure stocks are highly likely to be under immense selling pressure again today. There is no doubt that these particular sectors have been the worst performer for this year. In fact, Euro Stoxx travel and leisure index is down nearly 20% so far this year, the biggest decline since 2008.   

Time To Reload 

Investors’ chief dilemma is if the new strain of coronavirus is more perilous than the current one. Of course, the WHO doesn’t think that the new variant is more dangerous. But from a consumer and investor sentiment perspective, the new variant of coronavirus Is likely to cause more damage to the global economy.

This also means that the government officials and monetary policy members need to reload their guns as we could be in for a rough year. After all, it was the fiscal and monetary policies that saved the global economy from crippling. 

Overshadowed 

The new variant of coronavirus, if there is one, has overshadowed everything. For instance, the second stimulus package news literally had no positive influence on the US stock market. Remember, the US stock market reacted to every single positive and negative headline in the past concerning stimulus.

Now that we finally have the aid package, the market players have completely ignored this positive news, and their concerns are about the mutation of coronavirus. 

Speaking from a technical analysis perspective, there is no doubt that the US stock market moved away from its lows of the day yesterday, but the fact that stock futures are trading lower once again today is a matter of concern. If the selling pressure continues, it is highly likely that we will not only revisit the lows of yesterday, but the price could easily break below yesterday’s low.

Brexit: New Offer 

As for Brexit, the British Prime Minister, Boris Johnson, has made another fresh proposal to the EU in order to secure a trade deal. He is hoping that this new proposal will aid him in securing the deal in the 11th hour.

The new type of coronavirus in the UK has given the country an early taster of Brexit as countries have suspended travel from the UK and closed their borders. Boris Johnson is trying his best to reopen trade routes to France as soon as possible.

Although the above is a bit of an extreme statement, the fact is that without a trade deal, the UK is highly likely to face several challenges if there is a no-deal Brexit. The current full lockdown in London and southeast England is already having an adverse influence on the UK’s economy. 

Tesla Is Likely To Remain In Spotlight 

In terms of stocks trading, it was Tesla’s stock that kept investors busy yesterday, and it is going to stay on the traders’ dashboard today as well. It was Tesla stock’s debut as part of the S&P 500. No doubt, the stock got hammered yesterday. However, the sell-off was irrelevant, especially when we look at the YTD performance for Tesla, which says that the stock is up more than 650%. 

Geopolitical Tensions 

In terms of geopolitical tensions, the US has anchored those tensions with China even further by putting more than 100 Chinese and Russian companies on a new list which it says has links to the nations’ militaries.

Since the US presidential election, the hope among investors and traders has been a normalisation of the relationship between the world’s two biggest economies. However, the Trump administration is still busy creating the maximum damage to this relationship.