Opening Bell: Futures, Global Stocks Extend Rally; USD Slumps Ahead Of NFP

Key Events

US contracts for the Dow Jones, S&P 500, NASDAQ and Russell 2000, along with stocks in Europe, all gained on Thursday on hopes that today's Nonfarm Payrolls release will show the US jobs market continues to rebound. As well, early signs from Pfizer (NYSE:PFE) of a possible coronavirus vaccine added to the optimism.

Yields edged lower, the dollar weakened further, gold was flat and oil climbed.

Global Financial Affairs

Contracts on all four major US benchmarks were higher this morning with Russell 2000 futures leading the pack (+0.96%). However, just one day after the NASDAQ hit a fresh high, the NQ is lagging, (+0.48%). The uptrend comes ahead of NFP print, published a day early this month, ahead of the US Independence Day holiday which begins tomorrow.

Forecasts call for the release to show 3 million new jobs were added. However, with Continuing Claims also reported today—which last week showed that nearly 20 million Americans remained unemployed—the possibility of a positive vs negative release could pressure markets after both announcements.

This morning, the STOXX Europe 600 Index extended a rally for the fourth day. Bank shares outperformed.

STOXX 600 Daily

Today’s advance is breaking through the topside of a symmetrical triangle, signaling a resumption of the underlying uptrend.

Asian shares hovered near four-month highs, following yesterday's US session, where most stocks gained.

Shares listed on Hong Kong’s Hang Seng outperformed, (+3.75%), despite China's new national security law, seen by many as an effort to crack down on the autonomous city. Still, Chinese investors increased exposure to Honk Kong's market, on the expectation the legislation would end protests, restore stability and increase spending.

Shares of New World Development (HK:0017), a holding company that owns a variety of properties including department stores and hotels broke out of a congestion yesterday, in place since March, showing signs of a reversal.

It's possible of course that the stock's exceptional gains—on abnormally high volume, 50% higher than the 30-day average, which is unusual for a first session of a new quarter—may have occurred because of an “invisible hand,” China's Community party, which has been known to ensure market stability around key anniversaries and politically-sensitive events.

The mainland's Shanghai Composite was the region's second best performer, (+2.1%), while Japan’s Nikkei 225 followed well behind other regional indices, (+0.1%), as more than two thirds of its listed stocks declined.

On Wednesday, during the New York session, stocks received a shot in the arm as it were, advancing after the news broke that a joint effort by Pfizer and BioNTech (NASDAQ:BNTX) to develop a COVID-19 vaccine showed early promise. In addition, ISM Manufacturing PMI surpassed estimates. Both events boosted the outlook for a quick economic recovery.

The S&P 500 climbed for a third straight day. However, stocks trimmed some gains after Arizona and California reported their sharpest daily escalation of new cases of COVID-19 and Houston’s intensive-care units announced they'd exceeded maximum capacity.

The VIX dropped for the fourth straight day, falling toward a support since May.

VIX Daily

The index's trading pattern since early June has been producing a falling flag, in confirmation with the support. Also, the drop since April has been losing momentum, rounding out, as in a bottoming formation.

Supporting the view that the fear index may be bottoming, yields—including for the 10-year Treasury note—pared yesterday's gains.

UST 10Y Daily

Rates closed right on top of the broken uptrend line Apr 21. Today, they braved another attempt, but were rejected and are back below the uptrend line. The 50 and 100 DMAs joined forces with the uptrend line, overwhelming yields.

The dollar fell for a third day, either after completing a return-move to an already completed rising flag formation—–bearish after the preceding plunge—or as it developed a broader flag (dotted line).

DXY Daily

The ROC topped out and the 50 DMA is breathing down the 200 DMA’s neck, threatening a much-feared Death Cross. The greenback’s overall trading pattern, as well as today’s decline, is especially significant ahead of the NFP report.

Gold seemed to find its footing, up around 0.2%, after yesterday’s risk-on drop, when the precious metal fell 1.1% despite a weakening dollar.

Oil gained, on positive economic data, along with a strong drawdown in crude inventories. Is the oil market healthy again? Signs are mixed.

Up Ahead

• Monthly US jobs data, which includes Average Hourly Earnings and the country's Unemployment Rate will be released later today.

Market Moves

Stocks

• Futures on the S&P 500 Index climbed 0.4%.
• The Stoxx Europe 600 Index advanced 0.2%.
• The UK’s FTSE 100 declined 0.2%.
• The MSCI Asia Pacific Index was little changed.
• The MSCI Emerging Markets Index advanced 0.6%.

Currencies

• The Dollar Index fell 0.3% today, and 0.6% in the last three days, to 96.64.
• The euro edged up 0.2% to $1.1268.
• The British pound climbed 0.1% to $1.2488.
• The onshore yuan strengthened 0.1% to 7.066 per dollar.
• The Japanese yen weakened 0.1% to 107.54 per dollar.

Bonds

• The yield on 10-year Treasuries declined less than one basis point to 0.67%.
• The yield on two-year Treasuries increased less than one basis point to 0.16%.
• Germany’s 10-year yield fell less than one basis point to -0.40%.
• Britain’s 10-year yield gained four basis points to 0.211%.
• Japan’s 10-year yield declined one basis point to 0.036%.

Commodities

• Brent crude gained 0.71% to trade at $42.33