Equity markets rallied Tuesday morning with hopes that the worst of the Covid-19 pandemic is over. As some of world’s largest economies begin to reopen and news of potential vaccines continues to circulate, investors seem optimistic about market recovery.
However, with US-China trade negotiations still hanging in the balance, is this market positivity substantiated?
NYSE Trading Floor Reopens
After a 2-month closure, trading on the floor of the New York Stock Exchange resumed today. Although there are a limited number of traders operating under strict coronavirus guidelines, this marks a positive step forward for markets.
Dow Crosses 25,000 Mark
Also fueling bullish sentiment, the Dow Jones Industrial Average crossed above the 25,000 milestone on Tuesday after surging 600 points. Here’s a look at US equity futures:
- Micro E-mini Dow Futures (MYM) +2.36%
- Micro E-mini S&P 500 Futures (MES) +1.57%
- Micro E-mini Nasdaq Futures (MNQ) +0.29%
- Micro E-mini Russell Futures (M2K) +2.93%
Crude Oil & Gold Markets
Market optimism crept into crude oil markets as well. Crude oil futures soared to gains of nearly 5% Tuesday morning as the lifting of lockdown measures & the implementation of production cuts by OPEC have boosted investor confidence.
Gold futures, on the other hand, edged more than 1% lower Tuesday morning as traders’ appetite for risk returns to equity markets and away from safe-haven investments.
US-China Trade Tensions
Although overshadowed by positive news, US-China trade tensions remain high. In a tit-for-tat exchange over the weekend, White House National Security Advisor Robert O’Brien stated that the US could impose sanctions on both China and Hong Kong if China enforces national security laws on Hong Kong.
Trade negotiations between the two economic superpowers are sure to have an influence on markets in the near term.
The chart above, created 100% FREE using NinjaTrader, shows daily price movement in Micro E-mini Dow futures since the end of February. Currently trading above the yellow 50-day SMA, the Dow has overcome a recent resistance level (blue line) and could test the red 200-day SMA next.