US stock index futures edged down, suggesting risk sentiment could deteriorate again in the near term
Wall Street stocks extended gains overnight while the safe-haven dollar retreated along with US treasury yields as risk sentiment improved further after the recent sell-off in risk assets across the globe. The recovery was spurred by dip buyers and mostly positive corporate earnings. The Nasdaq Composite jumped 3.4% as Tesla and Netflix rallied over 10% each. The Dow Jones Industrial Average rose 1.1%, and the S&P 500 gained 1.9%. Still, for the month, S&P 500 was down 5.3% while the Nasdaq and the Dow lost 9% and 3% respectively.
In Asia, equities rose in Japan and Australia while other regional markets were closed due to the Lunar New Year holiday. Australia’s ASX 200 initially dropped as the RBA said it ends the bond-buying program. However, the index reversed early losses to end 0.5% higher after the central bank said the conditions for rate rises were not yet in place. Also on the positive side, the bank pointed to significant improvements in the jobless rate and the broader strength of the economy.
European equity markets opened higher on Tuesday, with EURO STOXX 50 adding more than 1% in early deals. On the data front, Germany’s retail sales tumbled 5.5% on the month in December versus a forecast for a fall of 1.4%. Despite the dismal report, DAX 30 rallied 1% since the start of the session. Meanwhile, US stock index futures edged down after a solid jump on Monday, suggesting risk sentiment could deteriorate again in the near term.
In currencies, the dollar stays pressured following yesterday’s bearish correction across the market. The USD index is back below the 97.00 figure, now threatening the 96.30 support zone, followed by the 96.00 level. As such, EURUSD exceeded the 1.1200 figure and extended the recent recovery to the 1.1270 zone before retreating marginally in recent trading. Despite the bounce, it looks like the common currency will struggle to get back above 1.1300 in the near term.