Futures Volatility Rises with Global Factors at Play

us china trade tensions micro futures

Investors are bracing for a volatile week in the markets with several global factors at play. Largely fueled by the U.S./China trade standoff, traders should be prepared for potential large swings in the coming days.

What’s Moving Markets?

Monday’s drop in the major indices was largely attributed to a tweet by President Trump in which he mentioned increasing tariffs by 10% on $200 billion worth of imported Chinese goods. This was later confirmed by U.S. Trade Representative Robert Lighthizer, who indicated these hikes would start on Friday. Lighthizer also threatened to impose a 25% levy on an additional $325 billion worth of Chinese goods.

During yesterday’s session, the Dow dropped as much as 471 points and the Nasdaq was down 2% at one point. As the day progressed, however, equities rebounded and closed relatively higher.

U.S. equity futures continued to drop Tuesday morning as trade tensions rise with China. Beyond China, tensions between the U.S. and Iran are on the rise after indications that Iran is planning an attack on U.S. forces in the region. The U.S. announced that an aircraft carrier strike group and bombers are being sent to the Middle East to send a “strong message,” according to Energy Secretary Rick Perry.

Current Snapshot

  • The S&P 500 Index was down as much as 1.25%
  • The Dow Jones Industrial Average fell as much as 1.18%
  • The Nasdaq Composite Index tumbled as much as 1.4%
    • Micro E-mini S&P 500 MES futures

      In the NinjaTrader chart above, the last two days of trading in the Micro E-mini S&P 500 (MES) can be seen. Volume profile has been drawn to indicate the price levels with the highest amount of trade volume. While yesterday the MES recovered nicely, today the price has dropped steadily and we could see a retest of yesterday’s lows.

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