S&P 500 Futures bounce off seven week low toward 3,350 amid risk reset

• S&P 500 Futures snap previous three-day losing streak to regain 3,300.
• Off in Japan weighs on market moves but upbeat headlines from New Zealand, China and Tokyo trigger the risk reset.
• Virus woes, US-Iran tussle stand on the other side but US dollar weakness pays for all.

S&P 500 Futures prints 0.20% gains while rising to 3,325 during Monday’s Asian session. Although the absence of traders from Tokyo and a light calendar trigger risk reset, news from Wellington and Beijing favor the risk-tone sentiment. In doing so, fears of the coronavirus (COVID-19) and the Tehran-Washington tussle seem to have been ignored, for now.

After a few weeks of the second lockdown, New Zealand’s (NZ) Prime Minister Jacinda Ardern announced an easing of virus-led restrictions to alert level 1 outside the epicenter Auckland. On the other hand, China’s President Xi Jinping praised the economic momentum while shrugging off geopolitical risks, indirectly hitting the US.

Alternatively, the recent surge in the UK’s pandemic numbers joins escalating new cases from Europe to renew fears of another lockdown conditions. Also challenging the risk could be the US threat to levy sanctions on over 20 firms tied to helping Iran over arms’ building.

Elsewhere, China’s Global Times again flashed war signals, this time for Australia, while saying, “If we have no choice but war, we should first avoid direct conflict with the US. We can (instead) severely beat up a US running dog that always crosses our bottom line… to send a warning.”

It should also be noted that the global markets are still hopeful of further stimulus from the UK, Japan and the US, which in turn should favor the equities. Though, tech rout and aid-package deadlock in America seems to weigh on the shares amid the mixed signals from the US Federal Reserve.

Moving on, Chicago Fed National Activity Index and Fed Chair Jerome Powell’s speech will be the key to watch for fresh impetus. However, risk catalysts will remain in the driver’s seat.