Geopolitics Weigh In Pre-Cash Trade

Weekend events in Israel weighed on e-minis from the Asia open, as increased geopolitical tension and the prospect for further escalation pressured broader sentiment.

• A second half rally in Chinese equity benchmarks meant that international feedthrough wasn’t quite as downbeat as it could have been. Mainland China returned from an 8-day holiday period, assessing slightly softer than expected domestic economic data from the break against the narrative pointing to a bottoming in the economy and calls for further easing from some quarters.
• Recent comments from Fed’s Logan promoted a very light bid for e-minis.
• E-mini futures sit 0.5-0.7% lower as we head towards cash trade.
• The NASDAQ 100 leads losses.
• Tech name Oracle breaks the broader market trend, last indicated 0.8% higher pre-market on the back of a positive brokerage move from Evercore ISI.
• Some have flagged links between chip companies and Israel as a negative for the sector in light of the weekend’s events (Intel & Nvidia are indicated 1.5-2.0% lower pre-market).
• Technically, a bear cycle in S&P 500 e-minis remains in play, despite Friday’s sharp corrective rally. The contract traded lower last Wednesday, confirming a resumption of the bear leg once again. This maintains the price sequence of lower lows and lower highs and signals scope for weakness towards 4,194.75, the May 24 low. Pivot resistance is 4,441.61, the 50-day EMA. Ahead of the 50-day average is resistance at 4,381.68, the 20-day EMA.