S&P 500: Futures keep mild gains above 3,250 even as risk dwindles

• S&P 500 Futures probe three-day winning streak while struggling to keep bounces off 3,239.
• Coronavirus-led deaths in the US marked the highest single-day increase.
• American diplomats inch closer to another trillion-dollar worth stimulus.

S&P 500 Futures ease from the intraday high near 3,261 to 3,258 during the initial hour of Tokyo open on Wednesday. Even so, the risk barometer prints 0.20% gains after rising for consecutive three days.

Although hopes of further stimulus, this time from the US, supports the previous day's risk-on mood, an increase in the coronavirus (COVID-19) death toll in America probes the optimists. Also challenging the market’s sentiment is an absence of major data/events.

While joining the league of US President Donald Trump and House Speaker Nancy Pelosi, American Treasury Secretary Steve Mnuchin also portrayed the progressing talks among the US policymakers on phase 4 of the stimulus. The Trump administration member also suggested that the bill could be passed by the end of July.

Alternatively, the pandemic death toll in the US is estimated to have crossed the 1,000 threshold on Tuesday, as per The Guardian. The news also says that the US Centers for Disease Control and Prevention (CDC) is forecasting up to 170,000 Americans’ death due to the virus by August 08. Elsewhere, figures from Tokyo are likely to print another below 200 figures whereas Australia may remain as the cause of concern with increasing numbers.

As a result, Japan’s Nikkei 225 drops 0.37% to 22,815 while the US 10-year treasury yields struggle to recover from 0.605% level marked the previous day.

Considering the recent risk-on sentiment, coupled with the anticipated boost to the mood by the US stimulus, the UBS bank’s forecast of 3,300 becomes likely. In its latest note, the bank said, “We expect profits to be down 40% in 2Q. However, as we expected, many management teams continued to emphasize that the outlook remains uncertain and is highly contingent on progress containing the coronavirus and additional government stimulus. Our S&P 500 EPS estimates of USD 122 (-26%) and USD 156 (+28%) for 2020 and 2021, respectively, remain unchanged. Overall, results should help sustain the rally we have seen over the last four months. Our June 2021 S&P 500 price target remains 3,300.”