Summary:
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US indices lower by 0.5-0.7%
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Geopolitics weighing on sentiment
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2nd consecutive red open for S&P500
There’s a couple of key US economic releases due out this week with the ISM Services reading due tomorrow and non-farm payrolls Friday, but for the here and now stock indices are being largely driven by events in the Middle East. The further ratcheting up of hostilities between Washington and Tehran has caused some negative trade in US indices ahead of the opening bell with all the benchmarks trading lower by between 0.5-0.7%.
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The US500 was looking bullish before the US strike in Iran with the market posting a record cash closing level. Friday saw the index began sharply lower but rally strongly in the 1st 30 mins, however some weakness into the close suggested possible weakness ahead. Price is currently trading lower by around 18 points from Friday’s closing level. Recent lows around 3206 a level to watch below. Source: xStation
The volatility index is higher, but gains of 4% seem rather meagre compared to the price action seen elsewhere with both Oil and Gold making strong gains overnight. In fact, with the VOLX trading with a 15 handle you could say there’s not too much fear around in the markets at present - certainly not as much as some of the more dramatic headlines are suggesting. This could obviously change very quickly and complacency should be warned against, but unless there’s a move back up to the 17 handle in the VOLX then the downside risk for indices appears to be not too great.
The volatility index (VOLX on xStation) remains fairly subdued, and while it has understandably gained given the recent events, it is still not at levels that warrant any panic for stocks just yet - this could obviously change very quickly. Source: xStation
