US Stocks Rally Fades on Lockdown Fears

Equities

Major US stock index futures fell sharply, erasing gains earned during the early trading hours of the week amid fears of another lockdown as US coronavirus cases continue to rise. California governor ordered to reclose restaurants, bars, and movie theatres due to a surge in Covid19 cases. Investors are afraid that covid19 developments would force another lockdown that could disrupt the economic recovery. The Dow Jones Industrial Average futures declined to 25932 from 26522, the S&P500 futures dropped to 3142 from 3225, and Nasdaq futures tumbled to 10562 from a record high of 11056.

USD

The dollar index, which measures the greenback against a basket of major currencies, edged higher to 96.66, erasing prior losses on improved demand for safety. The rising coronavirus cases and US-China tensions over Hong Kong are driving investors towards safety. The EURUSD eased to $1.1328, the GBPUSD dropped to $1.2515, and the risk-sensitive AUDUSD tumbled to $0.6926.

Metals

Gold prices continued to hover near $1800, awaiting fresh fundamental drivers. The precious metal is finding support from the soaring coronavirus cases, while the solid economic data are ensuring the economic recovery and lowering the chances of new stimulus. On the other hand, the price of a silver ounce held steady near $18.90 after testing $19.37, the highest since September, and Palladium futures eased to $2013.

Oil

Oil prices drifted lower amid growing fears from another possible lockdown due to coronavirus outbreak. The virus is spreading at a record pace around the world, which could force governments to decide on another lockdown to stop the spread. Oil demand levels could take another severe hit from such procedures. The West Texas Intermediate crude August delivery fell to $39.06, and Brent Blend September delivery declined to $41.79.

Major Economic Events

Disclaimer

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM.COM. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.