S&P 500 Futures: China, coronavirus entertain bears, Fed in focus

S&P 500 Futures stay depressed around monthly low, down 0.15% intraday near 4,415 during Monday’s Asian session.

The risk barometer dropped during the last two days amid risk-off mood but remains idle of late, still on the bear’s radar, as a baking holiday in China and Japan joins a light calendar elsewhere. Also challenging the trades is the cautious sentiment ahead of Wednesday’s Federal Open Market Committee (FOMC).

Even so, fears of a Lehman-like collapse of China’s Evergrande and mixed coronavirus updates weigh on the risk appetite. Also challenging the mood could be the uncertainty over the US stimulus and debt limit edit, as well as the latest pact among the UK, Australia and the US.

China’s Evergrande isn’t only flashing red signals due to $300 billion debt but 1,300 projects in over 280 cities and multiple linkages abroad also make it the key challenge to the global economy when the pandemic is taking a toll of late. Although the Chinese policymakers are trying their hard to rescue the firm and shareholders, risks remain high.

Elsewhere, New Zealand reports new cases outside Auckland but Japan stays ready to end the virus-led emergency. Further, Australia's covid count also eases of late.

It’s worth noting that Friday’s preliminary readings of the US Michigan Consumer Sentiment Index for September eased below 72.20 forecast to 71.0 but stayed above 70.30 prior readouts. The same joins the previously released US Consumer Price Index (CPI) and the escalating Delta covid variant cases to challenge the Fed hawks. Even so, firmer Retail Sales and factory-gate inflation data join the hopes of further stimulus to challenge the easy-money supporters.

That said, Axios recently reported that US Senator Manchin delay President Joe Biden’s spending package vote to 2022. On the contrary, US House Speaker Pelosi said to expect a bipartisan approach to address the debt limit, per Reuters.

Given the lack of major data/events, as well as an off in Japan and China, global markets may offer a lackluster start to the key week.

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