US equity futures erased part of last evening’s gain as President Trump failed to deliver a promised stimulus package on Tuesday. The White House is working on an economic plan including a payroll tax relief but details remain to be revealed.

Market sentiment remains fragile due to heightened volatility and uncertainties surrounding the Covid-19 outbreak.

Investors are walking on a tightrope between deteriorating macro picture and government stimulus hopes – in both monetary and fiscal forms. The development of Covid-19 in major economies and how it would impact normal business activities and corporates’ credit outlook remains a key driver of the market’s mid-term direction.

S&P 500 index surged 4.94% overnight, led by information technology (+6.6%), financials (+6.04%), consumer discretionary (+5.38%) and industrials (+5.22%). Defensive utilities (+1.01%), consumer discretionary (+2.92%) and healthcare (+3.47%) underperformed the benchmark.

Crude oil prices rebounded for a second day following its 30% tumble on Monday. Saudi Arabia has announced a plan to increase its crude oil output to 12.3 million bpd from current 9.7 million bpd, showing no signs of stopping the price war on oil any time soon. An oversupply situation compounded with a global demand drop will likely limit a cap on oil’s rebound.

In China, President Xi Jinping visited the city of Wuhan yesterday. This signals a milestone in China’s journey to combat with Covid-19. The number of new infections in China has fallen to below 50 in recent days, suggesting the epidemic is largely under control. Shanghai Composite and Shenzhen Composite have largely outperformed global markets this year, backed by improving virus situation and fiscal stimulus boosts.

US SPX 500 - Cash