Morning Brief: Dow Jones Futures Pause Ahead of Bank Earnings

US stocks rallied yesterday as the market remained optimistic about the US economy. The tech-heavy Nasdaq 100 index rose by 2.56% while the S&P 500 and Dow Jones index rose by 1.65% and 0.88%. Analysts attributed these gains to new polls that show that Joe Biden has a strong lead against the trade war-loving Trump.

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However, these gains have faded in the futures market, where the Dow Jones and S&P 500 are in the red. This price action is probably because of news that Johnson & Johnson had halted the trial of its coronavirus vaccine testing after a patient got subject. In a statement, the firm said that it was reviewing the condition and whether it was related to the vaccine.

A month ago, AstraZeneca and Oxford University also halted their vaccine trials but later restarted it after they concluded that the subject’s illness was not related to it. Still, such illnesses could lead to a prolonged trial period even as the number of Covid-19 cases continue to rise.

US futures are also wavering as investors prepare for a busy earning season that will start today. Analysts polled by Reuters and Bloomberg estimate that earnings will be slightly better than in the second quarter. However, the main risk is that companies’ earnings could be affected by the lack of stimulus.

Meanwhile, Asian equities are also little changed today. In Hong Kong, the Hang Seng index is little changed while in Japan, the Nikkei 225 index is up by 0.18%. In mainland China, the Shanghai composite is down by 10 basis points.

The Chinese equities are reacting to relatively strong trade numbers from the country. Data showed that Chinese exports increased by 9.9% while imports soared by 13.2%. As a result, the trade surplus narrowed to $37 billion. Similarly, in Europe, futures tied to the DAX index, Stoxx 50, and FTSE 100 are also little changed.

Later today, we will receive Turkish retail sales and industrial production data. We will also receive the monthly report from OPEC. Later on, the US statistics bureau will release the official consumer price index data.

Dow Jones futures technical outlook

The 3-hour chart shows that Dow Jones futures have been rising since they reached a low of $26,549. The price is above the trendline that is shown in pink and above the short and medium-term moving averages. It is also slightly below the important resistance level of $29,000. Further, it is a few points below the September high of $29,195.

Therefore, I suspect that the index will continue rising as bulls aim for the $29,000 resistance level. However, a move below the support at $28,611 will invalidate this trend.

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Dow Jones futures chart

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