Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. Opening Bell: Futures, Stocks Drop On Growth Worries; Treasury Rally Extends

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewJul 19, 2021 12:15
uk.investing.com/analysis/opening-bell-futures-stocks-drop-on-growth-worries-treasury-rally-extends-200487225
U.S. Opening Bell: Futures, Stocks Drop On Growth Worries; Treasury Rally Extends
By Investing.com (Pinchas Cohen/Investing.com)   |  Jul 19, 2021 12:15
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • Unease persists that coronavirus and inflation will disrupt the recovery
  • Oil fell below $70 on OPEC+ deal
  • Dollar strength sees gold slide

Key Events

US futures contracts on the Dow, S&P, NASDAQ and Russell 2000 and stocks in Europe retreated Monday on concerns that the global economic recovery will fizzle out due to a resurgence of coronavirus via the fast-moving and highly contagious Delta variant, along with increased inflation. This anxiety weighed on markets during Friday's trade and persisted over the weekend. That may be a sign that this view is beginning to gain traction.

Oil fell after an OPEC+ breakthrough deal to increase supply; the dollar accelerated.

Global Financial Affairs

All four US futures were in the red, with those on the Russell 2000 1.8% deep, while NASDAQ contracts were outperforming, down just 0.6%. Since the small cap index is the focal point of stocks likely to benefit the most from a return to a normal economy, and technology firms see more profit during social restrictions, today’s trading pattern demonstrates a continued retraction of the reflation trade.

The pandemic weighed on European investors’ minds, as travel and leisure shares, along with basic resources, were the heaviest drag on the STOXX 600 Index, which extended a selloff to its fourth session—the longest losing streak for the pan-European index since October. The benchmark is moving toward a six-week low.

STOXX 600 Daily
STOXX 600 Daily

The index may be completing a double-top, following waning momentum, with the RSI triggering a negative divergence and proceeding to complete its own double top.

Earlier Monday, Asian benchmarks also extended a selloff, with the MSCI’s gauge of Asia-Pacific stocks falling to a weekly low, on the ongoing spread of the Delta strain in Asian countries, including Malaysia, Indonesia and Thailand, as well as parts of Japan, especially Tokyo, where the Olympics are scheduled to kick-off on Friday. Positive cases among athletes is souring sentiment there. This morning, the Nikkei 225 was down 1.25%.

One biotech that made its name because of the virus, Moderna (NASDAQ:MRNA), jumped 10.3% after news broke that the drugmaker will be added to the S&P 500 Index on July 21, resulting in an upside gap as portfolio managers will be forced to buy the stock in order to continue tracking the index.

Last week, US stocks suffered a weekly loss for the first time in a month, as investors seemed to shift focus from the economic growth driven by fiscal and monetary policy to actual economic data which showed inflation spiking even more than expected and declining sentiment outshadowing strong earnings releases.

The selloff in stocks didn't occur in a vacuum. Rather, investors rotated funds into Treasuries, pushing yields on the 10-year Treasury note yet lower, below 1.3% and toward 1.26%.

10-year Treasuries Daily
10-year Treasuries Daily

Yields are under considerable pressure, having completed a rising flag—whose significance is underscored by the 200 DMA’s failure to support the downside breakout—bearish after the previous plunge, itself a downside penetration of a symmetrical triangle which was also bearish following a top.

Perhaps, foreign Treasury buying boosted the dollar. The greenback neared, then surpassed 93.00 at time of writing, for the first time since early April.

Dollar Index Daily
Dollar Index Daily

A close above 94 will complete a large double bottom. Note the RSI’s congested decline, reminding us of a falling flag, bullish after a preceding jump. Due to USD strength—probably on increased demand for Treasuries—gold is falling for the second day, despite risk-off sentiment.

Gold Daily
Gold Daily

The yellow metal is attempting to provide a downside breakout to its rising wedge, after completing an Evening Star, which found resistance by a Death Cross.

Bitcoin trading was listless for the fourth day, hovering at $31,600.

Oil opened lower and continued to sell off, moving below $70, for the first time since early June, as OPEC+ reached a deal to increase output. Producers will pump another 400,000 barrels a day each month from August, while the UAE and others secured higher quotas starting May 2022.

Oil Daily
Oil Daily

WTI completed a small H&S top, which is now testing the uptrend line since the Nov. 2 low. The 50 DMA reinforces the support of the uptrend line, while the 100 DMA supports the preceding triangle, whose implied target was achieved.

Up Ahead

  • The Reserve Bank of Australia meeting minutes are released on Tuesday.
  • On Thursday, the European Central Bank announces its rate decision.
  • The Bank of Indonesia also publishes its rate decision on Thursday.
  • US existing home sales are released on Thursday.
  • On Friday, the Tokyo Summer Olympics begin.

Market Moves

Stocks

  • Futures on the S&P 500 fell 0.4%
  • Futures on the NASDAQ 100 slipped 0.2%
  • Futures on the Dow Jones Industrial Average dropped 0.5%
  • The FTSE 100 fell 2.0%
  • The STOXX 600 declined 1.2%
  • The MSCI World Index fell 0.5%

Currencies

  • The Dollar Index rose 0.2%
  • The British pound fell 0.3% to $1.3726
  • The euro fell 0.1% to $1.1789
  • The Japanese yen was little changed at 109.99 per dollar

Bonds

  • The yield on 10-year Treasuries was little changed at 1.28%
  • Britain’s 10-year yield declined one basis point to 0.62%
  • Germany’s 10-year yield was little changed at -0.36%

Commodities

  • West Texas Intermediate crude fell 1.5% to $70.75 a barrel
  • Gold futures fell 0.6% to $1,803.80 an ounce
U.S. Opening Bell: Futures, Stocks Drop On Growth Worries; Treasury Rally Extends
 

Related Articles

Michael Hewson
German Election Ends In Gridlock By Michael Hewson - Sep 27, 2021

Despite hitting two-month lows last week, markets in Europe eventually managed to finish higher, on the week, reversing a run of three successive weekly losses. Concerns about...

U.S. Opening Bell: Futures, Stocks Drop On Growth Worries; Treasury Rally Extends

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Emma Bitcoin
Emma Bitcoin Jul 19, 2021 12:44
Saved. See Saved Items.
This comment has already been saved in your Saved Items
An investor without investment objectives is like a traveler without a destination. Send me a dm if you’ve got questions, I’ll be willing to help
Eli Ray
Eli Ray Jul 19, 2021 12:44
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Like your perspective 👍🏻
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email