Futures on US indices are posting modest gains ahead of the opening of the US session. The S&P 500 recorded its best session since May of last year, and investors are now trying to assess whether there is still room for the rebound to continue. The S&P 500 futures contract is up 0.6%, the Dow Jones is gaining 0.5%, and the Nasdaq 100 (US100) is rising nearly 0.9%. The US dollar strengthened slightly following stronger-than-expected ADP data from the US, with private payrolls coming in above forecasts (62k vs. 40k expected).
- Hedge funds have reduced their exposure to global equities for six consecutive weeks, primarily through short selling, with the sell-off spanning all major regions. In Europe, short positions in macro instruments have reached around 11%, the highest level in 10 years. On a six-week basis, net selling of US equities was the third largest in the past decade, approaching levels seen during the Covid period. Commodity Trading Advisors (CTAs) sold approximately $190 billion worth of equities over the past month and currently hold a net short position of around $50 billion. Goldman Sachs estimates that CTAs could become buyers in every scenario over the next month.
- Goldman Sachs also expects pension funds to buy equities due to month-end and quarter-end rebalancing. Around $7 billion of negative options gamma is set to expire at month-end, reducing pressure on the market. The Nasdaq 100 has fallen more than 10% from its peak, entering a formal correction, while the S&P 500 is close to doing the same. Europe’s Stoxx 600 index declined by around 9% in March, heading for its worst month in six years. Equity markets have approached technically oversold levels, and Goldman Sachs pointed on Monday to signs of hedge fund capitulation and very high levels of pessimism.
US500 (H1 timeframe)
Source: xStation5
US stock market news:
- The energy sector ETF XLE is down nearly 2% after Donald Trump said the US could leave Iran within two to three weeks.
- Nike is down 11% following weak guidance; the company was also downgraded by JPMorgan, Goldman Sachs, and Bank of America.
- RH shares are down more than 20% after missing expectations on profit, revenue, and outlook.
- Cal-Maine Foods is up 4% after beating expectations on both EPS and revenue.
- nCino is gaining 23.2% as quarterly metrics and guidance exceeded expectations.
- Target Hospitality is up 33.4% after securing a data center hub contract worth over $550 million.
- Bank of America is up 1.2% and Wells Fargo is up 1.5% after HSBC upgraded the banking sector from “Hold” to “Buy.”
- UnitedHealth is gaining 1.3% after being upgraded by Raymond James from “Market Perform” to “Outperform.”
- Rivian is up 2.6% after being upgraded by DA Davidson from “Underperform” to “Neutral.”
Bank of America (BAC.US), D1 timeframe
Source: xStation5
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