E-mini S&P 500 Futures (March): Settled at 3640, down 13.50
E-mini Nasdaq-100 Futures (March): Settled at 12,462.50, up 94.25
U.S. benchmarks are snapping back from yesterday’s lackluster intraday trade. The Dow and Russell 2000 each set a record high early before markets broadly retreated on news that New York City could go into a full lockdown if Covid-19 cases continue to rise and hospitals reach 90% capacity. While the S&P finished 1.4% from its session high, tech outperformed, only slipping 0.7% from its session high. Names such as Netflix +3.8%, Amazon +1.3%, Adobe +2.2%, DocuSign +1.2%, and the entire chip space all had a terrific start to the week. Remember, these were some of the bellwethers through the worst of the pandemic. Apple joined the party overnight and is +1.6% premarket, but the strength is much broader as tailwinds from the vaccine rollout work to offset lockdown fears.
Last night’s slate of Chinese economic data was in line with expectations, which is a good thing. Industrial Production improved by 7.0% YoY in November, versus 6.9% YoY in October. Fixed Asset Investment is quietly one of our favorite data points, as it covers spending on factories, roads, power grids, and more. It broke from its pandemic contraction in September and improved by 2.6% YoY for November, its best in a year. We find this data very supportive to both metals and energies. Coupled with USD weakness, it paves the way for our bullish calls on Platinum, Crude Oil, and Copper.
From the U.S., we saw fresh December NY Empire State Manufacturing at 7:30 a.m. CT, followed by Industrial and Manufacturing Production for November at 8:15 a.m. CT. We expect better data to support such early tailwinds across risk assets. ECB Executive Board Member Phillip R. Lane speaks at 8:05 a.m. CT and comments on the Euro will be important.
In the end, positive momentum to start the day is terrific to see and it plays perfectly within our risk-on narrative. However, continued strength is contingent on progress in Washington and negative headlines will reverse this early strength in an instant.
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