Risk Assets Rally on Chinese Stimulus News

U.S. benchmarks surged into month-end settlement
The broader market didn’t perform well amid negative breadth
Potential U.S. broad-based ban on Chinese software firms
Equity Index futures

Equity Index futures

Last Week's Close

E-mini S&P 500 Futures (September): Settled at 3263.50, up 14.75 on Friday and 59.50 on the week

E-mini Nasdaq-100 Futures (September): Settled at 10,890.50, up 96.50 on Friday and up 431.50 on the week

U.S. benchmarks surged into month-end settlement Friday and extended gains overnight. Apple, Facebook, and Amazon set the tone following Thursday’s earnings results gaining 10.47%, 8.18%, and 3.7% respectively, but the broader market didn’t perform well amid negative breadth. Typically, such opens the door to a lackluster follow-through session, but the People’s Bank of China said this morning that stimulus in the 2nd half of the year will be more targeted and flexible. Risk-assets then did what they’ve become accustomed to on stimulus news, rally. Copper is 2% off the overnight low and the S&P almost 1% from its mark. The boisterous sentiment on China’s announcement comes as uncertainty in Washington looms and tensions between the two countries mounts.

Republicans and Democrats in Congress are still wrangling out a 5th stimulus package aimed at boosting the U.S. economy. Unemployment measures from the previous bill, delivering $600 weekly jobless benefits, expired last Friday. Lawmakers met over the weekend and White House Chief of Staff Meadows reiterated Sunday he wasn’t optimistic on a deal. Treasury Secretary Mnuchin also made the rounds calling for a 1-week extension.

TikTok grabbed headlines after President Trump threatened to ban the Chinese-owned video app. The news exudes a deteriorating relationship between the U.S. and China as the White House looks to impose a more broad-based ban on Chinese software firms deemed to pose a security threat. China has expressed strong opposition to what it calls “discriminatory policy.”

Please sign up to have Blue Line Futures technical outlook, actionable bias and proprietary levels emailed to you each day.

 

 

About the Author

Blue Line Futures, is a leading futures and commodities brokerage firm offering discounted personalized service and futures and commodity research.