S&P 500 Futures part ways from Wall Street, Treasury bond yields dribble as 2022 bids adieu

Global markets remain mostly downbeat during early Friday as traders brace for the last active day of 2022 with mixed signals surrounding China and the US.

While portraying the mood, the US 10-year Treasury yields fade the previous day’s pullback from the six-week high by taking rounds to 3.8% while the S&P 500 Futures print mild losses around 3,865 despite Wall Street’s positive closing.

Among the main catalysts, pessimism surrounding China’s Covid conditions and the Ukraine-Russia tussles join the global recession woes to weigh on the sentiment. Alternatively, the hopes of the peak in the virus numbers in China and the discovery of an anti-Covid pill joins the chatters of no economic slowdown in the US and Europe to keep the markets positive. Also likely to defend the optimists is the US government funding bill worth $1.7 trillion for the fiscal year 2023.

Recently, the UK-based health data firm Airfinity said on Thursday that around 9,000 people in China are probably dying each day from COVID-19, double the numbers expected the previous day and higher than the official figures conveyed by China. It’s worth noting that seven counties including the US, the UK and Japan have already announced Covid-test requirements for travelers from China. Elsewhere, Moscow’s heavy missile fire on Kyiv and Kharkiv highlighted geopolitical woes while the US funding bill suggesting more weapon support for Ukraine also weigh on the sentiment.

On the other hand, Italy’s rejection of fears of any new Covid variant, after finding 50% of flight passengers being infected by the virus, seemed to have helped the markets in ignoring the fears of the virus.  Further, the headlines suggesting China’s discovery of a Covid antiviral pill and hopes of the CDC board to overcome the COVID-19 fears by citing the peak of virus spread in Beijing, Tianjin and Chengdu also favor the sentiment. Additionally, an absence of heavy losses to lives and infrastructures during Thursday’s heavy missile fire on Kyiv and Kharkiv by Moscow joined the global backup to Ukraine in suggesting a sooner end to the thorny issue and probed the pessimism.

Talking about the US data, Initial Jobless Claims rose 225K versus 216K prior for the week ended on December 24 while the Continuing Jobless Claims increased by 1.71M from 1.669M previous readout during the week ended on December 16. However, the 4-week moving average for the same dropped to 221K versus the revised down previous readings of 221.25K.

Looking forward, a virtual meeting between China President Xi Jinping and Russian counterpart Vladimir Putin could entertain traders while the US Chicago Purchasing Managers’ Index for December, expected 41.2 versus 37.2 prior, will decorate the calendar. Following that, Saturday’s official readings of China Manufacturing and Non-Manufacturing PMIs for the current month will be important to watch for clear directions.

Also read: Forex Today: US Dollar gives up as Wall Street advances