S&P 500: Futures part ways from Wall Street gains amid risk reset

• S&P 500 Futures snap two-day winning streak, recede from late-February high.
• The escalation in the US-China tussle attack vaccine-led optimism.
• China's GDP, ECB and US Retail Sales will be the key during the busy day.

S&P 500 Futures drop to 3,210, down 0.28%, during the initial hour of Tokyo open on Thursday. The risk gauge surged to the highest since February 25 on Tuesday amid increasing odds of the coronavirus (COVID-19) cure. Though, the latest developments on the Sino-American story pulled the sentiment index down after rising for two consecutive days.

The New York Times came out with the news suggesting that Trump administration is considering a sweeping ban on travel to the United States by members of the Chinese Communist Party and their families, according to people familiar with the proposal, a move that would almost certainly prompt retaliation against Americans seeking to enter or remain in China and exacerbate tensions between the two nations. Before that, White House Chief of Staff Mark Meadows announced the Trump administration’s study on national security risks emanating from Chinese apps like TikTok and WeChat.

On the other hand, China’s Global Times also showed readiness to engage in hand-to-hand combat with the world’s largest economy to safeguard ‘their’ city.

Before the latest rest, the market’s risk-tone remained upbeat over the multiple signals, from the US policymakers, UK scientists and companies like Moderna, favoring the vaccine’s nearby arrival. Also supporting the equities was increasing hopes of further stimulus from the global policymakers and weaker US dollar.

Against this backdrop, the Wall Street benchmarks managed to post another positive day while the US 10-year Treasury yields seem to pause their recent recovery moves around 0.63%.

While qualitative catalysts are likely to keep the driver’s keep, China’s Q2 GDP, monetary policy meeting by the European Central Bank (ECB) and US Retail Sales for June will be the key events to watch during the busy day. While most data suggest upbeat outcomes and could add strength to the market’s trading sentiment, fears of the escalation in the US-China tussle and the ECB’s anticipated dovish tone might guard the optimism.