US Futures, Dollar Rebound After Trump Says To BTFD

US equity futures rebounded from a poor start, which saw the E-mini initially tumble 1% early in the overnight session, then rise as much as 0.6% in yet another illiquid session boosted by Trump's latest attempt to talk up markets after an apparent de-escalation in tensions between the president and the Fed chair and Treasury Secretary. Earlier, Asian stocks outside of Japan dropped 0.2% to a two-month lows catching down to Monday's US market rout, while Europe was mostly closed for trading.

S&P 500 contracts gained 0.6% as of 7 am ET after falling as much as 1.1 percent earlier. Futures on the Nasdaq 100 Index and the Dow Jones Industrial Average advanced 0.4 percent and 0.5 percent, respectively. With the S&P closing on the edge of a bear market, traders will be looking for confirmation of more liquidation selling or else an attempt at lifting stocks from massively oversold levels.

 

Trump’s latest reversal and expression of confidence in the Treasury secretary, Fed chair Powell and the economy on Tuesday helped to modestly calm markets, which were roiled after Bloomberg reported that the president had discussed firing the central bank’s chairman over raising interest rates, while Mnuchin was also in danger of losing his job should stocks continue to slide.

As reported last night, Trump called Mnuchin a "very talented guy, very smart person" and also said that the central bank is "raising interest rates too fast” but he has “confidence” that the Fed will “get it pretty soon.” Separately, CNN reported that Mnuchin spoke by phone with Trump several times over the weekend and also after a brutal Christmas Eve trading day.

Commenting on the market rout, Steve Englander, head of global G-10 FX for Standard Chartered Bank said that "markets have pretty much made up their minds on how jumpy they want to be - very. The question is what is the primary driver of the jumpiness - economic concerns, Fed policy, Trump-Fed conflict, slowing of global growth? Nothing is particularly encouraging right now."

Earlier in the session, the MSCI index of Asia-Pacific shares ex-Japan slipped 0.5 percent, dropping to a two-month low, with the Shanghai Composite losing 0.4% while the CSI 300 Index slumped -0.5%, its lowest close since March 2016 and the ChiNext Index of small caps dropped -0.7%; South Korea’s KOSPI shed 1.6%.

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