FXStreet reports that strategists at Credit Suisse will be watching the close of the S&P 500 as if the index falls below 3013 would reinforce the near-term trend lower to correct the strong rally of the past three months.

“The close today is seen as critical as to whether we are indeed set for a correction lower as if a close below 3013 is seen today this would not only see the market below its 200-day average but would also see an important bearish ‘key-reversal week’ established. This would then reinforce the view the near-term trend has indeed turned lower with support seen at 2970 next, then 2957/55, which we would look to hold at first. Bigger picture, though, we would look for a move below here with the next meaningful support seen at the 38.2% retracement of the entire March/June rally at 2835.” 

“A close above 3027/32 today would remove the threat of a ‘reversal week’ to instead suggest we are likely to see a high-level consolidation phase, with resistance next at 3090/94, then the beginning of yesterday’s gap at 3124.”

U.S. stock-index futures rose on Friday, recovering after the worst market drop since March, which came on worries the U.S. economy could take longer to recover if  coronavirus infections resurge, as well as the Federal Reserve’s warning of a long road to recovery.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Tesla (TSLA) downgraded to Neutral from Buy at Goldman

Tesla (TSLA) downgraded to Underweight from Equal-Weight at Morgan Stanley

General Motors (GM) upgraded to Buy from Neutral at Goldman

FXStreet reports that economists at Natixis analyze if the return on European equities is too high as shareholder remuneration captures too much of the value-added at the expense of wages and investment or too low due to the risk associated with holding equities. 

“We see a 30-year average total return on equities of 9% in the eurozone, of which two-thirds from capital gains and one-third from dividends. When we look at the change in the total return on equities over time, we see that it has been lower since 2002 than it was before.”

“The criticism is that the return on equities is too high because the remuneration of shareholders is too high but there has been a decline in shareholder remuneration since 2008 going hand-in-hand with an increase in wages paid and an upswing in investment from 2015.”

“The return on equities is too low to compensate for the risk associated with holding equities, which is high given the high variability of the return on equities, and that, as a result, savers have switched to risk-free assets at the expense of equities and, more broadly, financing of companies. We see the low level and decreasing weight of equities in the portfolios, and the high level of the weight of risk-free assets.