S&P 500: Futures print mild gains above 3,150 amid mixed clues

• S&P 500 Futures catch a breather after declining from one-month high of 3,226.
• Traders struggle to justify risk catalysts as receding virus cases confront worrisome headlines for the US-China tussle.
• China trade numbers, US inflation data to entertain traders ahead of the earnings season.

S&P 500 Futures consolidate Monday’s losses around 3,155, up 0.15% on a day, during the initial hour of Tokyo open on Tuesday. The US equity derivative surged to the highest since June 10 the previous day amid hopes of further stimulus. However, risk-averse headlines dragged it into the red zone by the end of the day.

The risk barometer earlier dropped as traders anticipated escalation in the Sino-American tension to defy the market optimism. Also negatively affecting the risk sentiment was cautious mood before the earnings season starts.

Recently, news that the US drug-makers will soon kick-start the coronavirus (COVID-19) vaccine production initially offered risk-on moves. The pullback gained strength after Bloomberg came out with the news that US President Donald Trump’s aides rule out ending Hong Kong dollar peg as punishment to China.

Though, the optimism couldn’t last long as the Chinese embassy harshly criticized US Secretary of State Mike Pompeo’s attack on Beijing's claim over the South China Sea. Also troubling traders is the Reuters’ piece that indicates further hardships for Chinese firms’ listings on the US bourses.

Against this backdrop, US 10-year Treasury yields extend the latest downside to 0.617%, down 2.3 basis points (bps) while stocks in Japan, Australia and New Zealand market mild losses by the press time.

Although June month trade numbers from China and the US inflation data will offer intermediate clues to the markets, major attention will be given to the earnings of the major banks including JP Morgan, Wells Fargo and Citi. However, this doesn’t rule out the importance of qualitative risk catalysts to direct near-term trading sentiment.

Technical analysis

FXStreet’s Ross J Burland anticipates further upside of the index unless breaking the daily supports:

The S&P 500 is showing no signs of entry at this juncture until it either breaks upside structure, weekly resistance, or fails and breaks structure to the downside. A prudent trader will want to see confirmation one way or the other.

Read: S&P 500 index Price Analysis: Bulls in charge until a break below support structure