US futures were little changed over the weekend and European markets opened marginally positive, amid a very modest decline in new Coronavirus cases in US and a global death count surpassing 500k. In Asia, stock indices dropped sharply with Nikkei losing -2.3% (21995.04), Hang Seng Index –0.96% (24,313.14) and Kospi falling -1.93% (2,093.48) following the sell-off in US equities last Friday, 26 July.
Nonetheless, US markets were able to recover a good fraction of their loses closing on Monday confidently in the green – S&P 500 gained +1.47% (3,053.24), Nasdaq +1.20% (9,874.15) and Russel 2000 small-cap index outperforming with a +3.08% gain to close at 1,421.21. All S&P 500 sectors closed positively, lead by industrials and communications.
This is starting to look like a chart of the Nasdaq. pic.twitter.com/121FE0EoCr
— Sven Henrich (@NorthmanTrader) June 27, 2020
As expected, volatility has fallen sharply, yet VIX still remains at elevated levels, finishing at 31.78.
Boeing shares have gained over +14% after the U.S. air safety regulator announced they will start test flights of 737 Max airliner. Shares of Facebook have been able to recoup some of the earlier losses and gain +2.11%, after Starbucks and Coca-Cola announced they will pause the advertising on social media. On Sunday, Fed has also unveiled more details about its corporate bond-buying program, disclosing some of the names of its corporate debt holdings.
The US yield curve was almost unchanged on Monday, with 2-yr and 10-yr yields sitting at around 0.159% and 0.626% respectively.
In the commodity markets, oil continues to rebound along with equities, amid hopes for economic recovery. WTI Crude gained just below +3% to settle at $39.70.
On the economic front, this week we have Q1 GDP release for UK on Tuesday, European CPI on Wednesday and US Non-Farm Payrolls on Thursday (moved due to US Independence Day holiday on Friday 3 July).