The Dow Jones futures are trading lower as investors have genuine qualms about the spike in coronavirus cases in the US. I am skeptical of calling the current spike in coronavirus cases in the US as a second wave because the situation was never under control there and the civil unrest triggered by Trump’s tweet may have just made the existing situation worse. We do not have any strong evidence for a second coronavirus wave appearing in countries that have opened up after initially controlling the virus.
Additionally, the stock market rally was hoping for a hug from the Federal Reserve, but the lack of the Fed’s confidence in the US economic recovery is also impacting the S&P500 futures and the risk-on sentiment. However, the Federal Reserve is set to keep the interest at a lower rate for longer, which triggered a massive rally in safe-haven assets. Basically, the stock market rally is like a child who wakes up crying and wants the Fed to soothe it. The market breadth of the S&P500 still seems to suggest that the bull drive hasn’t lost momentum.
We have seen bulls returning to the commodity space; specifically gold, which surged massively yesterday on the back of the Federal Reserve's promise to keep the interest lower for longer. However, the gold price seems to have given up some of those gains today, although this can change as trading progresses.
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