US futures are continuing their weak performance today. The Dow Jones, S&P 500 index, and Nasdaq 100 have fallen by 0.40%, 0.45%, and 0.75% as the market braces for a wave of Covid-19 infections. The three indices fell by 0.58%, 0.66%, and 0.80%, respectively yesterday.
The same bearish trend is happening in Asia, where the Nikkei 225 and the Hang Seng have fallen by 0.55% and 1.45%, respectively. Similarly, in Europe, the futures tied to the DAX index, CAC 40, and Stoxx 50 are all down by more than 0.50%.
There are three primary reasons moving global equities today. First, recent corporate earnings have been relatively mixed. On Tuesday, companies like JP Morgan, Citigroup, and Blackrock released better than expected earnings. But they all warned that the economy was fragile and urgently in need for additional stimulus. Yesterday, results from Goldman Sachs were boosted by strong trading revenue. However, Bank of America and Wells Fargo disappointed.
Second, the S&P 500 index and other indices are reacting to the rising number of Covid-19 cases in the United States and European countries. Yesterday, the US confirmed more than 50k new cases while the numbers in Europe has been rising. Indeed, in a statement yesterday, Emmanuel Macron announced new travel restrictions. Other countries will do that as the cases rise. Third, global equities are reacting to the ongoing uncertainties about the upcoming elections in the US as the voting day nears.
Still, there are some positive news in the market. For one, the risks of the UK abandoning Brexit talks have been minimised. According to media reports, the two sides will continue talking since differences have relatively narrowed.
There will be minimal events in the economic calendar today. The only ones to watch will be the US jobless claims numbers, export and import price index, and the manufacturing index from the New York and Philadelphia Federal Reserve banks. The EIA will also release the crude oil inventory numbers.
S&P 500 index technical chart
The four-hour chart shows that the S&P 500 index has fallen sharply in the past three days. It has moved from last week’s high of $3,550 to a low of $3473. The price is slightly above the lower line of the Bollinger bands. The relative strength index has moved from the overbought level of 82 to the current 43.
Therefore, for today, I suspect that the index will continue falling as bears aim for the next support at $3,400. On the flip side, a move above the middle line of the Bollinger bands at $3510 will invalidate the bearish thesis.
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S&P 500 technical chart
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