Opening Bell: U.S. Futures Slide; Chinese Assets Tumble; Oil Jumps


  • U.S. futures point to weak open, but contracts find support
  • Chinese shares tumble on signs policymakers may dial back stimulus
  • Oil jumps on prospects of U.S. withdrawal of Iranian sanctions waivers

Key Events

Futures on the S&P 500, and NASDAQ 100 edged lower this morning, after Asian stocks swung between gains and losses at the end of the extended Easter holiday weekend.

Hourly Chart – Powered by TradingView

SPX contracts, however, seemed to have found support, bouncing off the 200-hour MA at around 9PM EDT.

In the Asian session, Japan’s eked out a gain (+0.14%), with big names like Softbank Group (T:9984), Fanuc (T:6954) and Fast Retailing (T:9983) weighing on the index. Seoul’s closed mostly flat (+0.02%), with chipmaker SK Hynix (KS:000660) (-0.25%) dragging prices lower.

Shanghai Composite Daily Chart - Powered by TradingView

Shanghai Composite Daily Chart – Powered by TradingView

Daily Chart – Powered by TradingView

China’s Shanghai Composite (-1.7%) underperformed on speculation the local government will wind down stimulus. Technically, the price met resistance at the Apr. 8 highs, setting the stage for a small double top and the potential for a larger H&S top.

China 10-Year Yield Daily Chart - Powered by TradingView

China 10-Year Yield Daily Chart – Powered by TradingView

China 10-Year Yield Daily Chart – Powered by TradingView

Investors shed Chinese bonds alongside equities, pushing the yield on 10-year notes higher. Technically, the price hit a pause around the 200 DMA, forming a pennant continuation pattern, following the completion of a double-bottom early in the month. The RSI, however, sets up a potential H&S top, as the MACD tops out.

Markets in Hong Kong and Australia remained closed for the holiday.

Global Financial Affairs

On Thursday, U.S. stocks wrapped up the holiday-shortened week slightly lower, giving up a three-week rally despite some upbeat corporate earnings results and better-than-expected manufacturing data in China, which had boosted sentiment across global markets earlier in the week.

With U.S. equities still nearing all-time highs, traders will have to determine whether the recent shift, by global central banks, to a dovish stance will be enough to compensate for an overall expectation of contracting earnings, amid some ongoing red flags to watch and a lack of forceful catalysts.

WTI Daily Chart – Powered by TradingView

In commodities, oil gapped up, jumping more than 2% after the U.S. said it plans to stop Iran oil waivers. The leap prompted a breakaway upside gap, whose bullishness is compounded by the completion a falling flag. However, that doesn’t mean the WTI price won’t retest the dual support of the gap’s bottom and flag’s top. As of the time of writing, the price has been trendless for the fifth consecutive hour.

Up Ahead

Earnings

  • Twitter (NYSE:TWTR) is scheduled to post earnings before market open on Tuesday, with expectations of $0.06$ EPS, from $0.09 in the same quarter last year. The social media company may soon start to reap the benefits of its recent efforts to step up both transparency and user experience standards.
  • Microsoft (NASDAQ:) (NASDAQ:MSFT) reports results after market close on Wednesday, with an EPS of $1, from the $0.95 it posted last year.
  • Facebook (NASDAQ:) (NASDAQ:FB) is expected to release earnings after market close on Wednesday, with a $1.65 EPS, slightly lower than the $1.69 it posted last year.
  • Amazon (NASDAQ:) (NASDAQ:AMZN) is due to report earnings after market close on Thursday, with a $4.61 EPS forecast, from $3.27 last year.
  • European bank earnings kick into full gear with reports from Deutsche Bank (DE:)(DE:DBKGn), UBS (NYSE:UBS), Barclays (LON:) (LON:BARC), Credit Suisse (SIX:)(SIX:CSGN) and Swedbank (ST:SWEDa).

Market Moves

Stocks

Currencies

  • The Canadian was up 0.15 percent against the U.S. greenback early Monday, trading at 0.7480.
  • The Dollar Index rose less than 0.1%.
  • The yen was steady at 111.92 per dollar.
  • The euro was flat at $1.1242.
  • The offshore yuan fell 0.2% to 6.7127 per dollar.
  • The British pound was steady at $1.2996.

Bonds

Commodities

  • West Texas crude surged 2.3% to $65.44 a barrel.



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