E-mini S&P (March)
Last week’s close: Settled at 3224, down 65.75 on Friday and down 69.50 on the week
Fundamentals: U.S benchmarks began Sunday night on favorable footing and are working to repair last week’s damage. Benchmarks from China are a different story. After being closed all last week for the Lunar New Year holiday, the Shanghai Composite finished down 7.72% Monday. Hong Kong’s Hang Seng which opened last Wednesday and lost 5.86% on the week traded to a new low but finished the session +0.17%. The Coronavirus death toll has surpassed 360 and the number of confirmed cases has mounted to 17,500. Also, the Philippines confirmed the first death outside of China. Panic has certainly set, but is the worst in? A narrative of ours; markets do not like uncertainty. Although there is no certainty as to the impact of Chinese and thus global growth or in stopping this outbreak, we do believe that markets have begun to digest the damage. What we do know, China is racing to combat weakness by injecting $22 billion (according to Bloomberg) in liquidity and this is working to stave off this panic. After last week’s bloodbath, U.S benchmarks are set to open higher, Gold is 1% from the overnight high and Treasuries are drifting back.
Speaking of Treasuries, the U.S 3-month bill yield is 1.55% this morning while the 10-year Note yield is 1.54%. This recessionary indicator is back after the 10’s lost 18 basis points last week and 41 in the month of January. The U.S 2-year Note lost 25 basis points in January and is trading at 1.35% this morning.
Coronavirus headlines will dominate an already busy week. Final January Manufacturing PMIs from Europe were a touch better. We now look to the closely watched U.S ISM Manufacturing read at 9:00 am CT. This read has missed expectations for six months running, essentially worsening since July to a contraction low of 47.2 for December. Final Manufacturing PMI comes ahead of this at 8:45 am CT. We look to the Services sector Wednesday and Nonfarm Payroll Friday.
Resistance: 3247-3250.50**, 3260.50-3262.50***, 3275.25**, 3289.75-3293.50***, 3297.25-3301.25***
Support: 3224***, 3212.75**, 3204***, 3172.50-3181****
Resistance: 9074-9092.25***, 9138-9158.785**, 9216.25***, 9240-9263.75***
Support: 8975*, 8925-8954.50***, 8907.25*, 8867.50***, 8737.75-8750***