September 11, 2020

Global Stock Market Weakened, Investors Lose Confidence

Global Stock Market Weakened, Investors Lose Confidence

The global stock futures are set to close the week in negative territory, while investors are hoping that this is nothing more than a healthy correction.

The Japanese stock market reversed some of its losses and rose 0.74%. The Shanghai index jumped higher, by 0.79%. The HSI stock index advanced 0.79%, while the Korean Kospi gained 0.01%.

The European Central Bank was less dovish yesterday than was anticipated. It made it clear that its mandate is price stability and it isn’t going to target the exchange rate. This has spurred a rally for the Euro. The Eurozone’s single currency has moved higher the most against the Sterling.

The policy makers in the U.K. have attracted another self-inflicted injury. Johnson wants to back peddle from the Brexit agreement with the E.U. The E.U. has threatened to take up the matter legally. Next week is going to be immensely important for the U.K. as it doesn’t have much time to decide about the E.U.’s deadline in relation to the legal challenge.

In addition to this Nancy Pelosi has said that the U.S. has no interest in forming a trade deal with the U.K. if it isn’t going to respect the E.U. agreement.

Market Breadth

It was another down day for the U.S. stock market and most of the intense selloff occurred in the final hour of the trading session yesterday. The Dow Jones breadth showed no change. 67% of the Dow Jones stocks traded above their 200-day moving average yesterday. 

The S&P 500 stock breadth weakened further and bears gained more ground. 57% of the shares traded above their 200-day moving average yesterday. This represents a change of -2% from a day earlier.  

Futures Today

The Dow Jones futures are trading higher by 212 points. The U.S. Jobless Claims data failed to impress the market yesterday and all eyes will be on the Core CPI number today. The forecast is for 0.2%.

The Dow Jones futures are in battle with the 50-day SMA on the daily time frame. The fear is that the index may not be able to win the battle this time. On Wednesday, the Dow Jones price bounced back up from its 50-day SMA indicating bargain buying.

Traders are still hopeful in terms of the bull trend as the price is trading above the 100 and 200-day SMA on the daily time frame. The next big hurdle for the Dow’s price is September 7th resistance, which is at 11,557. A break of this resistance will certainly confirm the continuation of the upward trend.

The S&P 500 futures, the broader representation of the U.S. equity market, could be in trouble once again. This is because the S&P 500 price is trading below the 50-day SMA at the time of writing this report.

If the price fails to break back above the 50-day SMA, it is highly likely that the downward move may continue. This means that the next possible support could be near the 100-day SMA. For the time being, bulls are confident as the price is above the 100 and 200-day SMA on the daily time frame.

The Rally 

The S&P 500 stock index is set to close the week in negative territory. It fell 1.76% yesterday. The information technology sector led the index lower, and all the eleven sectors closed lower. 

Tapestry stock contributed the biggest gain, soaring 8.37%. EOG stock was the largest drag; it fell by 9.22%. The S&P 500 stock index’s is up 9.6% during this quarter.

The Dow index declined 405 points yesterday, and the Dow stocks moved the index lower by 1.45%. 29 stocks of the Dow Jones Index decreased in value, and 1 share of the Dow index moved higher. 

McDonalds stock advanced higher by 0.71% and was the biggest mover for the Dow, while Microsoft stock dropped 2.8%, the biggest drag for Dow Jones industrial average index.  

The NASDAQ composite, a tech-savvy index, declined 2.12% yesterday. 

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