US equities slip over stimulus deadline

A rise in US futures softens the blow

Financial markets are very much locked into tail-chasing mode as the chatter from the US elections, fiscal stimulus and Covid-19 continue to provide plenty of noise. Wall Street equities melted overnight as Nancy Pelosi’s pre-election stimulus deadline approached today, without any sign of a breakthrough between the parties. At the same time, there are encouraging reports that Pelosi and Mnuchin were closing differences and would talk again today, which seen the dentists of Minnesota piling into US equity index futures this morning in Asia, sending them sharply higher.

The S&P 500 lost 1.62%, the Nasdaq dropped 1.63%, and the Dow Jones dropped 1.39%. The S&P 500 mini has rallied 0.66% in Asia, with Nasdaq futures 0.65% higher, and Dow Jones futures o.38% higher. The Nikkei 225 has edged 0.50% lower and the Kospi has fallen 0.75%. In China, the Shanghai Composite has drifted 0.40% lower, with the CSI 300 flat on the day, and the Hang Seng just 0.30% lower.

Regionally, Singapore has fallen 0.60%, with Jakarta, Kuala Lumpur and Taipei down just 0.10%. In Australia, the ASX 200 has eased 0.65%, with the All Ordinaries down 0.55%.

Globally, equity markets continue to dance to the nuances of the US stimulus negotiations, making it very hard to hold a firm view directionally.

With the US presidential debate on Friday and COVID-19 confirms increasing rapidly in Europe though, a sustained rally by equities from here will be challenging, even if a US stimulus package comes through at the last minute.

It’s a good bet that there will probably be a profit-taking sell-off or a deal failure sell-off in equity markets, in particular. This would likely benefit the US dollar and gold. Any fall in equity markets could be sharp but short-lived though, as the herd quickly look for another reason to be long everything.

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