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  • S&P 500 Futures snap the previous day’s recovery amid cautious sentiment.
  • On-going US aid package talks join the pre-Fed trading lull to weigh the risks.
  • US, Australia tension with China, lack of data ahead of the European session also stop earlier risk-on.

S&P 500 Futures drop to 3,682, down 0.12% intraday during early Wednesday. In doing so, the risk barometer trims Tuesday’s heavy gains as traders turn cautious with eyes on the US coronavirus (COVID-19) stimulus meeting and the Federal Reserve.

As per the latest updates from CNN’s Manu Raju, the US policymakers are juggling over the much-awaited aid package. The Senior Congressional Correspondent mentions, “After meeting in Pelosi’s office for about an hour during their second meeting of the day, McConnell and McCarthy are now huddled in the Senate GOP leader’s office. No word yet on where the covid talks stand.”

Earlier in the day, US Senate Majority Leader Mitch McConnell struck an upbeat tone for the stimulus.

Read: Progress was made on stimulus talks

Elsewhere, the recent surge in the virus cases and death rates, not to forget the fresh variant of the COVID-19, as per the UK, countries in the Northern hemisphere jostle with local lockdowns. Among them, the US, Britain and Europe are badly affected.

It should be noted that the global wave of removing Chinese companies from the key indices like S&P, DJI and MSCI suggests that the western tussle with Beijing is getting serious. Also, Australia is up for asking the World Trade Organization (WTO) for help relating to China’s trade-punitive measures and escalate the tension with its major customer.

Also weighing the quote is the generally observed pre-Fed mood. Even if the Fed is widely expected to keep the monetary policy unchanged, its likely announcement of further easing in 2021 will gain major attention.

Amid these plays, stocks in Asia-Pacific print gains while following Wall Street close and hopes of vaccine at home.

Moving on, developments concerning US stimulus, Brexit and Fed will be the key. However, the preliminary readings of December’s activity numbers will also be important to watch.

Read: Federal Reserve Preview: How a dose of economic Christmas cheer could spoil the market mood