This time, the spread betting estimate of where the Dow pauses will go on Sunday turned out to be correct, and IG expects a drop of -230 points several hours before the market opens …
… that’s exactly what we got at 6 pm EST, when the Dow futures dropped to 250, Spu was -30, and Naz was -80.
Why an early encounter with gravity? Because how Amplify Trading writes, Still, the market is still wary of the second wave of coronavirus: in the United States over the past two weeks, the incidence rate has increased by 15%, and in 18 states in the south, west and midwest, the number of cases is growing . Over the weekend, new cases in California increased by a record (4,515), while the number of infections in Florida increased by 3.7% compared with the previous day compared with an average increase of 3.5% over the previous seven days.
Recall that on Friday the company’s shares fell after Apple announced that it would close nearly a dozen stores in the US again due to the recent increase in coronavirus infections in the south and west, and although the technology giant can still work efficiently on the Internet, the move was an ominous sign for brick and mortar retailers across America and a belief in optimism that US recovery was well underway.
A number of Fed officials also remained cautious, as the Rosengren (non-voter) Fed said Friday that “the lack of containment could ultimately lead to the need for longer stops, which will lead to reduced consumption and investment and increased unemployment,” with the addition of Neil Cascari “Unfortunately, my basic scenario is that we will see the second wave of the virus in the United States, perhaps this fall.”
Two other noteworthy events associated with this virus come from Germany, where infection rates have risen to the highest levels in the past few weeks after more than 1,300 slaughterhouse workers tested positive for the virus. R-Naunt in the country rose to 2.88 on Sunday from 1.06 on Friday. Meanwhile, China has blocked the import of American poultry from clusters at Tyson Foods factories.
What to expect this week
According to Amplify, one of the most important datasets this week is the latest Flash PMI data on Tuesday. While a rising heading number may cheer you up a bit, the certainty that data is promising in itself is two interesting points.
- This can change greatly depending on the development of the second wave virus (in the style of Apple on Friday).
- According to ING analysts, looking at other data, including the Google Mobility Index, the economy seems to be still operating well below its level before the virus.
Finally, here is the calendar of the week’s events, kindly provided by NewsSquawk
- Data: EZ Consumer Trust Sales in the USA
- Events: negotiations of the Chinese LPR, the US Army and Russia; Meeting of Foreign Ministers of China, Russia and India
- Speakers: ECB de Guindos and Lane, Fed Cascari, RBA Low
- Data: EZ, PMI UK and US (Flash)
- Delivery: UK, Germany and USA
- Data: German Ifo
- Events: RBNZ Rate Decision, Bank of Japan Summary of Opinions
- Speakers: ECB Lane, Fed Evans and Bullard, draft budget of the EU Commission for 2021
- Delivery: UK, Germany and USA
- Data: German GfK, US durables, GDP (final), PCE prices (final), initial jobless claims
- Speakers: Schnabel & Mersch ECB, Haldane BoE
- Supply: USA
- Data: Japan Consumer Price Index, US PCE Price Index, University of Michigan’s Personal Income and Sentiment (F)
- Speakers: ECB Schnabel