S&P 500 futures 3600.25 down 22.75 (0.63%); DJIA and RUT futs down 0.73%.
From ZeroHedge:
Monday's global stock rally unleashed by a 2nd round of covid vaccine hopes this time courtesy of Moderna, and which pushed the Dow and all major indexes to new record highs, fizzled on Tuesday as investors shifted focus back to the accelerated near-term spread of the virus and the creeping shutdowns which are certain to hammer the US economy. S&P futures dropped 0.5% or 20 points as New Jersey, California and Iowa imposed fresh restrictions as the number of new US cases hit a record, and threatened to worsen as the colder weather sets in. Nasdaq 100 futures were boosted by yet another reversal in the reflation trade, as well as a jump in Tesla on the prospect of the electric-car maker’s shares joining the S&P 500.
Curiously, the same 3,600 "gamma wall" level which we warned yesterday would complicate a major push higher in the S&P ahead of op-ex, is now serving as a buffer to the downside, and will limit losses. Sure enough, the Emini session low so far today has been... 3,600.
S&P 500 futures slid a day after the underlying benchmark closed at an all-time high on news that Moderna’s vaccine was shown to be 94.5% effective. Drug retailers such as Walgreens Boots Alliance tumbled 10%, while CVS Health Corp fell 6.4% after Amazon launched an online pharmacy for delivering prescription medications in the U.S.
"We might be transitioning from a defensive bull market to a more cyclically offensive one but more clarity is required in terms of when social mobility will normalize,” said Chris Iggo, chief investment officer of core investments at Axa Investment Managers. "The euphoria created by the presidential election result and the vaccine announcement will give way to a more sober analysis of how long and smooth the road to recovery will be."
Not everything was red: Tesla soared 12.4% premarket in anticipation of a $51 billion trade by index funds adjusting their holdings when the company is added to the benchmark S&P 500 in December. At $400 billion, Tesla’s market capitalization is a hundred times that of the S&P’s smaller companies, according to Refinitiv data, making it the biggest ever addition to the index.
In Europe, the Stoxx 600 Index slipped 0.4% by 7:45 am ET, following a sharp drop to session lows just after 6am, with travel shares and banks leading the decline. S&P 500 futures pointed to a small drop at the open, the 10-year Treasury yield was at 0.895%, oil held over $41 a barrel and gold was broadly unchanged.
Earlier in the session, MSCI Asia Pacific Index added 0.2% led by the finance and energy sectors, while Japan's Topix index closed 0.2% higher. Most Asian markets were up, with Singapore's Straits Times Index advancing 1.1% and Indonesia's Jakarta Composite rising 0.6%, although China's Shanghai Composite slid 0.2%. Trading volume for MSCI Asia Pacific Index members was 15% above the monthly average for this time of the day. The Topix added 0.2%, with MUFG and Tokio Marine contributing the most to the move. The Shanghai Composite Index retreated 0.2%, driven by Kweichow Moutai.
In FX, the pound led gains among G-10 currencies on optimism of a Brexit breakthrough, rising for a third day, followed by the Swiss franc and Japanese yen. The Bloomberg Dollar Spot Index fell for a third consecutive session, to touch more than a one-week low, as the greenback fell against almost all Group-of-10 peers; the euro advanced after briefly dipping below $1.1850. Yield curves in Australia and New Zealand bear steepened amid speculation that funds may be shifting from these markets to Treasuries. China’s yuan strengthened to the highest level since June 2018, fueled by optimism over the country’s economic recovery and its interest-rate premium over the rest of the world.
The yuan strengthened to the highest level since June 2018, as it was on pace to gain for a fourth session while the dollar weakened. The Chinese currency traded onshore rose as much as 0.5% to 6.5500 a dollar on Tuesday. The yuan is also trading at its highest in more than two years against a basket of trading partners’ currencies. The yuan has been boosted by investor optimism in the economy’s performance during the virus pandemic....
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