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  • S&P 500 Futures extend Monday’s pullback from record top, prints mild losses intraday.
  • Hong Kong police arrest more opposition party members, Trump administration announces more sanctions.
  • US stimulus talks progress, vaccine hopes flash mixed signals and Brexit jitters continue.
  • Japanese aid package details, US fiscal relief measures and US-China tussle headlines will be closely observed.

S&P 500 Futures drops to 3,680, down 0.30% intraday, during the early Tuesday. In doing so, the risk barometer declines for the second day after refreshing the record top of 3,700 during the last Friday. Although Brexit jitters and uncertainty over the US stimulus have earlier soured market sentiment, chatters concerning fresh US-China tension recently weighed on the risk-tone.

Not only the Trump administration’s fresh sanctions on 14 Chinese diplomats but another round of Hong Kong crackdown by the police also heavy the mood off-late. Even so, China’s Foreign Minister Wang Yi expects upbeat discussions over the phase 2 trade talks with US President-elect Joe Biden.

Elsewhere, US Senate Majority Leader Mitch McConnell sounds optimistic over the latest stimulus talks whereas House Speaker Nancy Pelosi recently said, via the latter to House Democrats, “Negotiations on government spending bill are making progress”. It should also be noted that Japan is up for the third round of the emergency budget to battle the coronavirus (COVID-19) as the infections grew recently.

Furthermore, the Brexit tantrum keeps market players on the edge as policymakers are near the make it or break it stage. The UK PM Boris Johnson is up for visiting Brussels even as the key hurdles remain unsolved. Talking about the covid vaccine, Pfizer may not be able to deliver much of its vaccine to the US after June as its preoccupied with the overseas orders while Canada is up for approving the vaccine for usage and Russia is ready for distributing the cure to the pandemic.

Not only the S&P 500 Futures, but stocks in Asia-Pacific also portrays mild risk aversion whereas the US 10-year Treasury yields remain sluggish around 0.93% by press time.

Considering the light calendar and deadline of the key events like Brexit, market players will keep their eyes on the risk catalysts for fresh impulse.