S&P Futures Break Resistance

What's New

. Asian shares pushed higher today, as US stock futures moved past the 3,000 resistance with investors looking past the US-China trade tensions, as more stimulus will take place in China and the world economy is restarting.

. MSCI Asia-Pacific (ex. Japan) rose 1.6%, while Japan's Nikkei jumped 2.6% to its highest since March. S&P500 Eminis are up around 1.8%, steering higher than the 3,000 level. The Chinese CSI300 was up 0.8% after the PBoC said implicitly that it would push for more stimulus and also pursue lower interest rates on loans.

. The comments were mostly a reiteration of past comments, however, they helped offset the war of words between Washington and Beijing over trade, the coronavirus and China's proposals for stricter security laws in Hong Kong. Analysts note that investors are currently more interested on the prospect of reopening than the US-China tensions.

. Japan has ended its nationwide state of emergency, Spaniards are back in bars wearing masks, and the UK will allow some businesses to reopen on June 1. Furthermore, reports suggest that Germany wants to end a travel warning for tourist trips to 31 European countries from June 15.

. Investors in bonds suspect that economies will still need more stimulus, as yields will need to be kept low as governments will borrow more. US 10-year yields were trading at 0.67%, down from 0.74% last week, as the market took a few days to absorb a large inflow of new issuance.

. While this would have been bad news for the dollar in usual times, as rates are near or less than zero in other countries, along with the dollar's liquidity, meant that currency ranges held tight. For example, the dollar is still within the 106-108 range against the Yen since the start of May. With regards to the Euro, the range has been 1.0760 and 1.1000 since the start of the month.

. Interestingly, analysts note that the dollar could break higher if the US-China trade tensions continue or if they threaten the existing trade deal. This would be disastrous for currencies such as the Yuan, the Aussie and the Kiwi.

. Oil prices were up today as the Russian Minister of Energy said the rise in demand for fuel could cut the global oversupply within the next two months. At the same time, the country mentioned that it was close to meeting its production cut target of 8.5 million bpd for May and June.

. Gold was down slightly today at $1734 per ounce with some investors moving away from the yellow metal after hopes were raised with regards to a vaccine.

. Earlier today, Singapore's 2020q1 GDP was better than expected, at -0.7% y/y, with the state-nation's bellwether economy suggesting that economies are returning slowly back to normal. The country's industrial production was up 3.6%m/m in April and more than 13% up from a year ago.

. In Europe, Germany's consumer climate was still negative at -18.9, coming out better than last month but worse than expected.

Up and Coming

. House prices are expected to have grown by 3.3% y/y in March in the US, while the Conference Board's consumer confidence index is seen to have risen to 88 from 86.9 in the previous month. Still, new home are forecast to have dropped by more than 20%.

. In Russia, retail sales are forecast to have plunged 15%, while unemployment is seen to have risen to 5.5%. The big question is now what happened to the country's real GDP.

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