August 17, 2020

Dow Jones Futures Up, US-China Tension In Focus

Dow Jones Futures Up, US-China Tension In Focus

The Dow Jones Industrial Average futures are trading higher, while investors are keeping a close eye on the U.S.-China tensions. The six-month trade review (between the U.S. and China) was slated for the weekend, but it didn’t happen. Russia is looking to begin its coronavirus vaccine trial in Saudi Arabia, and the U.A.E. and speculators have raised alarm bells by raising short-bets against the S&P 500 index.

No Trade Deal Review 

China has been lagging in its purchase of U.S. agricultural products under the agreement, but Donald Trump has still touted this deal as a success. The fact that Trump appears to be calling this deal a victory indicates that any threat in terms of uncertainty for the U.S. equity markets is unlikely. Still, one never knows, given the sensitivity around this matter.

Trump Has Ordered TikTok to Sell Its U.S. Operation

Trump officially ordered the Chinese social app, TikTok, to sell its U.S. operation as the U.S. part of TikTok’s operation is considered a national security threat as per Trump’s view.

Geopolitical Uncertainty: Lockheed Martin Sold Jets to Taiwan

Geopolitical tensions between the U.S. and China have also been fueled on the back of news that Taiwan has signed an agreement to buy dozens of F-16 jets from Lockheed Martin, an American company. This move is likely to bring some adverse reactions from Beijing in the coming days, as this is the first deal of its kind since 1992.

Coronavirus Update 

The global coronavirus cases have surpassed the 21 million mark, and more than 772K people have lost their lives due to Covid-19. The U.S. has nearly 5.4 million cases of coronavirus. Many schools in the U.S. aren’t comfortable to reopen because they believe the situation isn’t under control. On the other hand, Trump has shown his firm stance on this, and he has pressured schools to begin in-person training.

The emergence of a second coronavirus wave around the globe remains a significant challenge as the lockdowns have eased off. Spain has ordered night clubs to close as the coronavirus number started to spike once again in the country. We also hear an echo of this in Italy, where clubs will be closed again too. France is also experiencing an uptick in coronavirus cases around the country.

Russia’s Coronavirus Vaccine Trial In Saudi Arabia and U.A.E 

On the coronavirus vaccine front, Russia has agreed in principle to conduct the clinical trial of coronavirus vaccine in the U.A.E. and Saudi Arabia. Previously, there had been reports of the Russian vaccine trial taking place in the Philippines. Scientists have shown doubts about the Russian vaccine and its possible adverse side effects. 

Smart Money Betting Against S&P 500 

Speculative net short positions have increased once again, and the S&P 500 index could be in trouble if these bets turn out to be correct. Speculators have increased their bearish bets against the S&P 500 E-mini futures, and these bets are at their highest level in nearly two months, as per the latest CFTC data. Traders who do not believe in the coronavirus stock market rally are saying that valuations are way overstretched. They do see the on-going tensions between the U.S. and China as a critical threat for U.S. stocks. This is despite the fact that the S&P 500 index has recorded six positive weeks out of seven recently.

Oil on the Move 

Crude and Brent oil are on the move today, and both have surged ahead of the OPEC+ gathering this week. The agenda for this gathering is to discuss the supply deal. Investors are hoping that the supply will remain in check as global oil demand is still fragile and quite dismal. WTI Crude is trading at $42.23, and Brent is at $45.12.  

Global Stock Market Today

The global stock market had a mixed session today. Stocks in China moved higher; the Shanghai index soared 2.05%. The HSI stock index jumped 0.78% while the ASX stock index declined by 0.81%, and the Korean Kospi stock fell by 1.23%. 

Dow Index and S&P500 Index: Market Breadth

The U.S. stock market’s breadth continues to improve. Bulls are in control of the price, at least for the time being. 60% of the Dow Jones stocks traded above their 200-day moving average on Friday. 

The S&P 500 stocks also show bullish price action for the coronavirus stock market rally. 59% of the shares traded above their 200-day moving average on Friday. 

Dow Jones and S&P 500 Futures Today

The Dow Jones futures are higher by 70 points, while stock investors are keeping a close watch on the geopolitical tensions between the U.S. and China.  

The Dow Jones Industrial Average futures have started the week on the front foot. The Dow is trading in positive territory, and the Dow is well above all of the three crucial simple moving averages, which are 50, 100, and 200-day. As long as the price stays above them, bulls are likely to control the upward movement in the stock rally.

The S&P 500 index, the broader representation of the U.S. stock market, is forming more of a consolidating pattern. The S&P 500 is failing to breakout of its all-time high. Traders do believe that if the price continues to consolidate here, it is likely that the sentiment may become bearish. This is because traders will start to think that the S&P 500 doesn’t have the momentum to continue its upward journey anymore. However, the bulls are hopeful that the index will cross the all-time high as the price is trading above the 50, 100, and 200-day simple moving average. 

Stock Market Rally 

The S&P 500 index closed on a negative note on Friday; the S&P 500 stock index declined 0.02%. The utility sector led the gains for the S&P 500 stocks, and six out of eleven sectors closed with gains. McKesson stock contributed the most gains, up 4.26%. Southern Co. was the biggest drag; it declined by 2.64%. The S&P 500 stock index is 0.61% below its 52 week high.

The Dow index soared 34 points on Friday, and the Dow stocks pushed the index higher by 0.12%. Seventeen stocks of the Dow Jones Index soared, and 13 shares of the Dow index declined. Boeing stock jumped higher by 1.93% and was the biggest mover for the Dow while Home Depot stock declined 0.39% – It was the biggest drag for the Dow Jones industrial average index.  

The NASDAQ composite, a tech-savvy index, fell 0.12% Friday.