S&P 500 futures are pretty much flat on the day now
Are we seeing a breather/turnaround in the market after another extension of the risk rout earlier? Or will there be more selling later in the day once Wall Street steps in?
That is the key question that the market has to figure out today and I still say that the odds of either one happening are as good as a coin flip - similar to what I said earlier today.
After sharp moves in the market, there is always the scope for a pullback. So perhaps this is it, but perhaps we could see a deeper pullback as well later in the session.
There is no right or wrong in these circumstances but just be mindful that headlines still matter despite the tricky sentiment in the market right now. So, any major fears of the virus hitting the US (now the key focus in the outbreak) will be the one to watch.
Global Times' editor, Hu Xijin, has already begun to put a spin to that story here:
"I think now the US is the country with potential large uncertainties. Many doubt that the US has only 57 cases of coronavirus. It can't be ruled out there is problem with the diagnosis. COVID-19 is probably the biggest variable to the US economy and US presidential election."
I reckon the trading day ahead will be more choppy but I wouldn't be surprised if we do see a bit of a pullback today in risk after the rout over the past two days.
But I would say that fear will override emotions again ahead of the weekend so the market will position as such towards the Friday close.
However, if coronavirus headlines continue to evolve more rapidly, expect that to weigh on risk and any pullback will likely be short-lived with fear and hysteria still riding high now.
Anyway, in other parts of the market, we are seeing more mixed signals with the aussie and kiwi staying pressured in the currencies space. In the commodities space, gold is still holding up but oil continues to keep losses under $50 now.
