European developments trigger a rebound in global risk assets

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In an intra day not to investors, Gorilla Trades strategist Ken Berman, while commenting on the strong rebound in global risk assets, said:

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Q1 2020 hedge fund letters, conferences and more

News From Europe Boost Global Risk Assets

The major indices all surged higher following the weekend break and stocks are trading near their intraday highs at midday. Even though the U.S. COVID-19 situation remains dire, the positive European developments triggered a strong rebound in global risk assets. Investors are betting on shorter lockdown periods, which has been helping cyclical issues and utilities this morning. Energy markets are having another highly volatile day, as even though the highly-anticipated emergency OPEC+ meeting has been postponed, the latest reports suggest that a major oil production cut is, in fact, coming this week.

The domestic economic calendar was empty today, but we still got a few European indicators this morning. With the European lockdown orders being in place for several weeks now, today's negative surprises cast a shadow on the global short-term economic outlook, despite the mostly positive virus-related developments. While European equities have been following global risk assets higher today, the euro continues to be under pressure, hitting a two-week low against the dollar today. All eyes remain on the fragile European financial system, which remains a major risk factor for U.S. banks too.

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Market Wrap

Dow: 22,073, + 1,020 or 4.9%

S&P 500: 2,610, + 122 or 4.9%

Nasdaq: 7,731, + 358 or 4.9%

Russell 2000: 1,113, + 61, or 5.8%

Small-Caps Join The Rally

Market breadth has finally been bullish this morning as small-caps joined the rally, is still far from being convincing, with advancing issues outnumbering decliners by a 9-to-1 ratio on the NYSE. 18 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 9 stocks hit new 52-week highs. The major indices have been trading above their VWAPs (Volume-Weighted Average Price) for most of the morning session, indicating intraday buying pressure. The key sectors are all in the red in the wake of early dip, and cyclical issues have been clearly lagging the broader market. The fact that cyclical issues and tech stocks have all been showing strength is a positive sign for the afternoon session, especially given the bullish shift in the short-term breadth indicaots. Stay tuned!