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Stock Futures Retreat From Overbought levels

US stock futures are flashing red, but the main indexes are still set to finish the month with strong gains. At the time of writing, the futures on Dow Jones have declined by 0.70%, the S&P 500 has dropped 0.60%, and Nasdaq is down 0.25%.

Bears took the lead as incumbent President Donald Trump is pondering on blacklisting Chinese chipmaker SMIC and oil and gas producer CNOOC. Such a decision would deteriorate the tensions with China before President-elect Joe Biden comes to the White House.

Meanwhile, the Indian Council of Medical Research (ICMR) is investigating an alleged adverse reaction to the COVID vaccine developed by AstraZeneca, though it said it had found no reason to halt the trial. A 40-year-old man stated that he had experienced severe neurological and psychological symptoms during the trial.

Despite the retreat, Wall Street is set to conclude one of the best months. The Dow has added almost 13% so far, which would be the best month since January 1987. Elsewhere, the S&P 500 and Nasdaq have gained over 11%.

The energy sector, which has lost the most year-to-date, has been among the best performers in November, adding almost 34%. Financials, materials, and industrials have also secured double-digit gains.

In individual corporate news, S&P Global is reportedly in advanced talks to acquire UK-based IHS Markit for about $44 billion, the Wall Street Journal reported yesterday.

In Asia, equities are mostly bearish in early trading on Monday as investors retreat from the overbought levels.

At the time of writing, China’s Shanghai Composite is up 0.86%, while the Shenzhen Component has gained 0.46% after opening lower. Data released earlier on Monday showed that the manufacturing PMI rose to 52.1 in November, beating expectation of an increase to 51.5, following the October reading at 51.4. The non-manufacturing PMI also topped estimate, growing to 56.4 after 56.2 in October.

Hong Kong’s Hang Seng Index has lost 1.53%. The government decided to give schools an early Christmas break as the city reported 115 daily coronavirus cases on Sunday.

Japan’s Nikkei 225 declined by 0.79%. Asia’s second-largest economy saw industrial production growing 3.8% m/m in October, after an increase of 3.9% in September.

South Korea’s KOSPI has dropped by over 1%.

Hyundai and Kia’s US divisions agreed on Friday to pay a record $210 million civil penalty after the US National Highway Traffic Safety Administration said that the two Korean carmakers failed to recall 1.6 million vehicles for engine issues before deadline.

In Australia, the ASX 200 closed 1.26% lower.

In the commodity market, oil prices are declining after the conclusion of a panel of OPEC+ ministers couldn’t reach consensus on whether to continue the production cuts after the deadline set for January 2021. The members left the matter to be discussed during a full meeting later today. A source told Reuters that the UAE and Kazakhstan don’t endorse the continuation of the production cuts. Both WTI and Brent have lost over 2.2% so far on Monday.

Gold is also bearish as investors hope that the vaccines produced by Pfizer with BioNTech, Moderna, and AstraZeneca would push the global economy. The metal is experiencing the worst month in four years. At the time of writing, gold futures are down 0.68% to $1,776, breaking below $1,800 for the first time since the end of June.

In FX, the US dollar continues to decline on similar fundamentals, as investors are departing from safe-havens. Also, markets expect the Fed to endorse further easing. Fed Chairman Jerome Powell will present his testimony before Congress tomorrow and on Wednesday. The USD Index is down 0.12% to 91.692. EUR/USD is up 0.07% to 1.1970.

The pound is surging against both majors on Brexit talks optimism.

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