Covid-19 Concerns Weigh on Risk Appetite

Quadruple witching was an unwinding of bullish positions
Covid-19 reemerges in Germany
The week ahead is sprinkled with Fed speak
Equity Index futures

Equity Index futures

Last Week's Close

E-mini S&P 500 Futures (June): Settled at 3059.50, down 38.50 on Friday and up 35.75 on the week

E-mini Nasdaq-100 Futures (June): Settled at 9923.50, down 59.50 on Friday and up 291.25 on the week

On Friday’s quadruple witching, U.S. benchmarks posted session highs at the opening bell upon the expiration of June futures and options. After trading lower into the close, price action gapped down on the open Sunday night. In similar fashion to aweek ago, negativity quickly dissipated and European hours brought a wave of buying. The S&P 500 index has traded more than 2% from its opening low.

To end the week, fears that Covid-19 is reemerging weighed on the risk-appetite. Cases were budding in China and through the southern U.S. states. Additionally, quadruple witching was an unwinding of bullish positions and worked to exacerbate such sentiment.

Coming out of the weekend, news of the virus being contained in China helped turn things. Furthermore, hopes of stimulus measures from Europe have continually lifted markets and overnight was no different. Although the DAX index is still red, it's well off the opening lows. Still, headwinds persist, a continued uptick in new U.S. cases, a reemergence in Germany, and a worsening situation in South America. 

The week ahead is sprinkled with Fed speak. Today, we look to Minneapolis Fed President Neel Kashkari, a 2020 voter, at 5:30 p.m. CT. Chicago Fed National Activity turned positive this morning for the first time in 3 months; this was an abysmal number even before the pandemic. U.S. Existing Home Sales were out at 9:00 a.m. CT along with European Consumer Confidence. ECB and German Bundesbank members speak throughout the day. Tomorrow brings closely watched Flash PMIs, which for headline value, are beginning to normalize.

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