S&P 500 futures reverse the bearish opening gap, not out of the woods yet

• S&P 500 futures see a gap down opening on Monday.
• Coronavirus 2.0 fears, UK terrorist attack and US-China woes weigh.
• The drop in the US futures point to negative Tokyo open.

Following a bearish opening gap of about 120-pips on Monday, the S&P 500 futures reverse a part of the early decline. The bears, however, remain in control amid broad risk-aversion, mainly triggered by a surge in coronavirus cases worldwide, intensifying the second-wave fears.

Rising rates of COVID-19 infection in some US states, parts of China, Germany and some developing nations have raised concerns about a second wave of the coronavirus. The fears spread across the Atlantic after the virus reproduction rate in Germany jumped to 2.88 on Sunday.

Undermining the risk-tone further, the UK labeled the weekend stabbing rampage in town park as an act of terrorism while the souring US-China diplomatic ties continue to put the odds of the phase one trade deal at risk.

Amid a slew of negative reports dropping in at the weekly opening, the Asian stocks are likely to witness a downbeat start, taking the cues from negative Wall Street close and the recent drop in the US equity futures.

Also, reflecting the tepid risk tone, the US benchmark 10-year Treasury yields are down 0.80% near 0.695% region while S&P 500 futures shed 0.40% to trade at 3050, at the press time. The bulls are facing an uphill task on their attempt to close in the bearish opening gap.

The recovery momentum could likely pick up pace only above 3050, opening doors towards the next resistance around 3100-3115 levels, which is the confluence of the 20, 10 and 5-DMAs. While to the downside, the 200-DMA at 3024.61 is the level to beat for the bears.