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US pre-open: Futures point to solid gains on vaccine optimism

By Iain Gilbert

Date: Tuesday 26 May 2020

US pre-open: Futures point to solid gains on vaccine optimism

(Sharecast News) - US futures were pointing to solid gains ahead of the bell on Tuesday as investors returned from the long Memorial Day weekend to news that pharmaceuticals firm Novavax had begun trials on a Covid-19 vaccine in Australia.
As of 1230 BST, Dow Jones futures were up 1.98%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.82% and 1.66% firmer, respectively.

The Dow closed 8.96 points lower on Friday as a ratcheting up of tensions between Washington and Beijing offset optimism surrounding a potential Covid-19 vaccine from biotech group Moderna Therapeutics.

While Moderna may have been the darling of the previous week, Maryland-based firm Novavax was making all the headlines on Tuesday after announcing it had started the first human study of its experimental coronavirus vaccine and that results from the trial were expected in July.

Also in focus were heightened tensions between Washington and Beijing, which seemingly escalated over the weekend when White House National Security Advisor Robert O'Brien stated the US will most likely slap sanctions on China if it chooses to go ahead with new national security laws that would grant it greater control over autonomous Hong Kong.

China's foreign minister Wang Yi denounced a move by the US government to expand an entity list of Chinese companies restricted from doing business with American firms due to alleged human rights abuses in the Xinjian Uighur Autonomous region. Yi claimed that political forces in Washington were pushing the two nation's toward a "new Cold War".

However, SpreadEx analyst Connor Campbell said: "Even with talk of a 'new cold war' between the US and China over the weekend, the relationship between the superpowers disintegrating in the face of repeated Trump attacks and Beijing's intentions for a new national security law in Hong Kong, the Dow Jones is aiming to indulge in the same buoyant mood as its European cousins this afternoon.

"The futures have the Dow adding around 0.8%, a move that would leave it within 40 to 50 points of 25,000 - a major milestone, given it sits beyond the midpoint between February's 29,500 all-time highs, and March's sub-18,200 lows.

Investors were also keeping a keen eye on economic activity in US states that had begun reopening following the coronavirus-related lockdowns, with the Chicago Fed's national activity index being released at 1330 BST and the Dallas Fed's manufacturing index following at 1530 BST.

Elsewhere on the macro front, the S&P/Case-Shiller home price index will be posted at 1400 BST, while the Conference Board's consumer confidence data and new home sales figures will be published at 1500 BST.

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