The Trump administration rejects Beijing’s claims in the South China Sea; China to sanction Lockheed Martin and Covid-19 stock rally

The future of the Dow Jones are trading lower as investors prepare for the earnings report. This period of profits could mark the lowest for US stocks as the process of reopening the global economy has started. Of course, the local shutdown around the world, as well as the emergence of the second wave of coronavirus have significantly limited the reopening process. However, the fact is that every day we gain a deeper understanding of the virus and in doing so we get closer to finding a vaccine.

Wall Street recognizes that the world is better prepared to deal with the pandemic now than at the start of this year. Likewise, companies have a better understanding of how to handle the current situation compared to the period when everything was closed. Speculators are likely to bet on this fact, that this quarter could be the worst for equity earnings and that any sale of stocks due to their low profits could be an opportunity for good business.

However, traders are concerned about excessive stock valuations. The fear is that we have gone too far and too fast. The setbacks caused by the emergence of a second wave of coronaviruses have not been fully assessed.

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The S&P 500 and Dow futures are also influenced by the news that the Trump administration still has climbing the already existing tensions with China. Relations between Washington and Beijing are strained due to the territorial dispute in the South China Sea. The United States has rejected China’s claim regarding the South China Sea. Basically, the Trump administration has reversed the previous American policy of not taking sides in territorial disputes.

In a reprisal action, China will put sanctions against Lockheed Martin
LMT
. Investors are mainly concerned about this continuing escalation of tensions between the two major superpowers.

The global stock market had a negative trading session. The HSI index fell the most and closed with a loss of 1.09%. The Shanghai index and the Japanese Nikkei index also lost 0.83% and 0.87%, respectively.

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Profit from bank shares

Wall Street investors expect to continue the message they received during the last stock market profit regarding bank profit. JP Morgan
JPM
, Citi and Wells Fargo
WFC
will report its quarterly revenues, and expectations are that their revenues will be influenced by an increase in the allowance for loan losses and a decrease in consumer spending. However, we can see some bright spots in trading income due to the volatility of the US stock market.

Oil prices: OPEC + can reduce its supply

The biggest issue for oil traders is the partnership between OPEC + and Russia which has resulted in reduced oil supplies. How long this partnership will last and how they will approach the expiration of this agreement are the two questions for traders. Looking at the action of the side prices of WTI and Brent, it is clear that traders are not sure of the future of the price of oil, but they are optimistic that prices will not fall from a cliff as before. The expectations are that they will increase the supply by a small amount, which could be around 2 million barrels b / d.

Dow Jones and S&P 500 Futures Today

Dow futures are trading today as the stock market rally wears off. Overall, the sense of risk takes a hit because investors have become cautious.

Yesterday, the Dow Jones index briefly exceeded the simple moving average of 50 days over a daily period, which is positive for the stock rally. However, traders were quick to take profit from the table, which is why we did not close above this moving average yesterday. Overall, Dows’ price looks solid because the DJIA price is trading above the two critical moving averages: 100 and 200 day SMA.

Stock market rally

The US stock market gave up most of its gains in the last hour of trading yesterday, and this confirmed that traders are not sure how the new profit season will shape the resumption of risk.

S&P 500 stocks fell 0.94% and gave up all their gains. The information technology sector led the S&P 500 down, 278 stocks fell while 226 stocks gained. The S&P 500 Index is down 0.77% in the past five days, but has increased 3.75% in the past 30 days.

The S&P 500 airline index should be at the center of investor concerns today. The airline index has the second largest weighting in the S&P 500 index. The airline index peaked in June and since then we have observed a downward trend. Delta Airlines
OF
will announce its earnings today, and investors will study the impact of Covid-19 on passenger traffic.

The Dow Jones closed higher and posted small gains of 0.04%. 17 Dow Index stocks soared and 13 fell. Pfizer
PFE
was the largest engine and advanced 4.08%.

The NASDAQ composite, the techie index, suffered the largest loss yesterday and closed down -2.13%.

Coronavirus: 13 million cases

Worldwide, coronavirus cases have passed the 13 million mark and more than 570,000 people have died from Covid-19. In the United States, coronavirus cases increased more than 64,000 from the previous day. This is a 2% increase in the Covid-19 cases, which roughly corresponds to the average daily increase of 1.9%.

Japan has declared that it will not hesitate to declare another emergency if it is necessary to stop the spread of the virus. The wearing of a mask will be made compulsory in the United Kingdom from 24 July. Again, this is a measure designed to stop the spread of the coronavirus or, more importantly, avoid the second wave of coronavirus in the UK.

In the United States, the coronavirus outbreak is slowing the recovery process, while Singapore reported that it had entered a recession and that its GDP had fallen 41.2% from the previous three months.