US OPEN: Wall Street opens flat amid China-US tensions

• Wall Street opens more or less flat

• Russell 2000 (US2000) attempts to clear long-term resistance

• Pfizer (PFE.US) and BionTech (BNTX.US) sign contract with US government

Wall Street opened almost unchanged on Wednesday. S&P 500 and Dow Jones dropped slightly at the open while Nasdaq launched the day a bit higher. Investors are weighing upcoming earnings reports against stimulus news and deteriorating US-China relations. The US dollar weakens against most peers.

Authorities in the United States are discussing the next coronavirus relief package that would soften blow from soon-expiring unemployment benefits. Time is of the essence as the US Congress enters summer recess in August and decisions on new stimulus measures should be made before that. Meanwhile, relations between China and the United States continue to deteriorate.

United States orders China to close consulate in Houston

Relations between China and the United States continue to deteriorate. The United States ordered China to close its consulate in Houston. Asian countries vowed to retaliate and media reports suggest China may order the US to close its consulate in Wuhan. Republican Senator Marco Rubio said that the decision is long overdue and China's consulate in Houston is a "massive spy center". Given that Trump is trying to shift public attention to how great the US is at handling the coronavirus pandemic, comments relating to origin of the virus are likely to be made more often now. Summing up, we may see anti-China rhetoric on the rise ahead of the US elections in November and it could have a negative impact on markets in case actions follow words.

Russell 2000 (US2000), US small-cap index, is lagging behind Nasdaq, S&P 500 or Dow Jones during a post-pandemic recovery. US2000 attempts to break above the long-term price zone at 1,485 pts. Should it succeed, an upward move towards the 1,585 pts swing level could follow. However, the index will need to break above the post-pandemic peak at 78.6% retracement first. Source: xStation5

Company News

The United States government has struck an agreement for 100 million doses of coronavirus vaccine manufactured by Pfizer (PFE.US) and BioNTech (BNTX.US). The US government will pay $1.95 billion for vaccine doses. Payment will be made once doses are received. The US government also has an option to boost order by additional 500 million doses for $19.50 per dose.

Slack Technologies (WORK.US) filed an EU competition complaint against Microsoft (MSFT.US). Slack accuses Microsoft of using illegal and anti-competitive practices. Issue will be reviewed by the European Commission.

Biogen (BIIB.US) reported Q2 earnings report ahead of today's Wall Street open. Company managed to generate revenue of $3.68 billion, or 1.8% YoY higher. Adjusted EPS rose 12.1% YoY to $10.26. In both cases results were much better than the market expected. However, it should b e said that most drugs developed by Biogen saw weaker sales than a year ago. However, drop was offset by strong sales of Biogen's blockbuster, Tecfidera. 

Best Buy (BBY.US), the US consumer electronics retailer, said that its sales recovered and are rising. The company said that quarter-to-date sales through July 18 were 2.5% YoY higher. International sales grew 8% YoY while domestic sales were 2% YoY higher. Sales grew around 15% in the June 15 - July 18 period.

Best Buy (BBY.US) has fully recovered from the coronavirus drop, rising more than 100% off the March's low. The stock launched today's trading above its previous all-time high ($92). The nearest resistance can be found at the 127.2% exterior retracement of February-March drop ($104 area). Source: xStation5