S&P 500 futures correct from three-week tops, virus resurgence dents risk

• Coronavirus flare-up globally dents risk appetite on Tuesday.
• Dour EU economic forecasts add to the market pain.
• Negative US stock futures suggest a negative Wall Street open.

The risk-off sentiment remains the main underlying theme so far in the European session this Thursday, as markets assess the resurgent coronavirus flare-up induced lockdown risks. The fears over the second-wave of the virus picked-up amid spikes in new cases globally and regional lockdowns re-imposed.

The virus anxiety knocked-off the S&P 500 futures from three-week highs reached at 3,183.88 in the Asian trades. The sharp correction accelerated in Europe, as the futures now flirts with daily lows of 3,144.62, down 0.78% on the day.

The sell-off in the European equities and the bleak economic forecasts published by the European Commission exacerbated the pain in the US futures benchmark. The European Commission forecasts deeper slump amid ‘more pronounced’ economic divergences.

With the drop, the S&P 500 futures reverse nearly half the recent rally backed by the narrative of a quicker economic rebound and vaccine hopes. The further downside appears more compelling, as the risk-off market profile is likely to extend into the NA session.

A lack of significant macro news will likely offer no temporary respite to the bulls.

S&P 500 futures technical levels

To the downside, the 5-DMA at 3,139.87 could offer immediate support, below which the 3,101.81 (10-DMA) will be tested. On the flip side, the three-week high at 3,183.88 will once again test the bulls’ commitment. A break above which the 3,200 mark will come into play.