S&P 500 Futures lick its wounds near three-week low, US Q4 GDP in focus

• S&P 500 Futures trim the previous day’s losses, the biggest in three months.
• Fed’s dovish halt, ECB policymaker’s negative rate signals weighed on market sentiment.
• Covid vaccine updates, hopes of US stimulus and pre-data consolidation favor the recent corrective pullback.
• US Q4 GDP is likely to recede from 33.4% prior during its preliminary reading.

S&P 500 Futures pick up bids above 3,700, currently around 3,745, while trying to reverse the previous day’s heavy fall during early Thursday. The risk barometer dropped the most since late October on Wednesday amid downbeat signals from the key central banks.

Firstly it was the ECB Policymaker, also Dutch Governor, Klass Knot, who teased further negative rates. The ECB Governing Council Member also said, “The euro strength would take prominence for the central bank if it threatens its inflation outlook.”

Following that the US Federal Reserve’s dovish statement, suggesting moderation in the US economic activity and employment, weighed on the risks even as the Fed left the benchmark rate unchanged, matching wide expectations. It should be noted that Federal Reserve Chairman Jerome Powell tried to placate bears with hopes of recovery while citing the economic uncertainty afterward.

Read: Forex Today: Dismal US data and central banks smashed the USD

That said, the recent improvement in market mood could be traced to the vaccine news suggesting that the UK has enough vials while Pfizer conveyed optimism to tackle the virus variants. In the latest update, BioNTech and Pfizer collaboration said, “In-vitro studies demonstrate Pfizer and BioNTech covid-19 vaccine elicits antibodies that neutralize SARS-COV- with key mutations present in the UK and South African variants.”

It should be noted that the hopes of US President Joe Biden’s $1.9 trillion stimulus and anticipated economic growth due to the vast vaccination in the key countries also favored the latest risk consolidation.

Looking forward, global market players will wait for the first reading of the US GDP for the fourth quarter (Q4), expected 3.9% QoQ versus 33.4% prior. Should the GDP also misses the mark, traders are likely to keep piling on the risk-safety and favor the US dollar versus the stocks.

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