E-mini S&P 500 Futures (September): Settled at 3098, down 9.00
E-mini Nasdaq-100 Futures (September): Settled at 9983, flat
June futures and options expired at 8:30 a.m. CT. Options on securities expire at the close. Quadruple witching typically brings volatility in its aftermath as positions are unwound. Ahead of the Federal Reserve meeting last week, we called for this date to bring a cleansing. Last Thursday’s volatility helped speed the process up, but as this expiration passes and quarterly rebalancing approaches, we still expect there to be added two-way volatility and advise traders to be vigilant for sharp selloffs upon such repositioning and unwinding.
U.S. benchmarks pointed higher ahead of the open and European hours again buoyed the tape. Central bankers have been and continue to be front and center. Boston Fed President Rosengren kicked things off at 9:15 a.m. CT, followed by Fed Governor Quarles at 11:00 a.m. and Federal Reserve Chair Jerome Powell at noon along with Cleveland Fed President Mester. Powell and Mester (a 2020 voter) have already made the rounds this week, but market participants will look key off any comments on the heels of fresh data this week.
The EU Summit is also grabbing headlines as leaders laid out a timeline to approve the lauded €750 billion stimulus package, giving themselves another month. The deal, supported by Germany and France, would solidify the bloc behind a budget and what is anticipated to be €500 billion Euros worth of grants for the hardest hit nations. ECB Christine President Lagarde warned of a negative impact if the deal fell through. Like Fed Chair Powell, central bank leaders have been steadfastly calling for fiscal measures to keep economies afloat in the aftermath of the Covid-19 pandemic.
Commodities and stocks are getting bid after China reportedly told state-owned agriculture buyers to attempt to meet the lauded Phase-One trade deal quotas. This is bullish and taken as a sign that U.S.-China relations haven't deteriorated much despite the political jawboning.
Yesterday, the tech sector, led by Microsoft, Salesforce and Oracle, helped bring the tape off early lows. Consumer Defensive and Energy also posted solid sessions. Energy is a leader again today with the XLE +2% premarket after OPEC reassured markets of compliance through July.
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