S&P 500: Futures trim initial losses but optimists still await a push

S&P 500 Futures drop 0.06% while taking rounds to 3,116.
Fed’s Kaplan trimmed some of the initial losses with upbeat statements.
Headlines from North Korea, Beijing question the earlier risk-on sentiment.
US Secretary of State Mike Pompeo’s visit to Hawaii also probes the risk-on mood.

Anil Panchal FXStreet

S&P 500 Futures register 0.06% losses while trading around 3,116 during the initial Asian session on Wednesday. The risk barometer recently gained after Dallas Fed President Robert Kaplan spoke positively for the US economy. However, the traders are still cautious considering the risk of the coronavirus (COVID-19) resurgence and geopolitical tension in Asia.

Fed’s Kaplan said that the US economy probably bottomed in early May. The policymakers also poured cold water on the face of expectations favoring downbeat employment numbers while expecting ‘strong’ job reports in summer.

On the other hand, Beijing locks outbound travels in the latest effort to curb the pandemic’s wave 2.0 whereas Japan registers the highest fresh cases since May 30. Also challenging the market’s mood could be the geopolitical tension between the North and the South of Korea, as well as among India and China.

Additionally, US Secretary of State Mike Pompeo is heading to Hawaii to meet the Chinese diplomats. Considering the recent tension between the US and China, coupled with the Pompeo’s hard stand against Beijing, traders remain cautious ahead of the meeting. It should also be noted that downbeat outcomes of the Reuters Tankan Survey and Iran’s refrain to give access to two of its nuclear sites also contribute towards challenging the previous risk-on sentiment.

Against this backdrop, the market optimists may extend their latest pause while any more negative news could recall the risk-off sentiment.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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