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Looming Inflation Data May Weigh On Wall Street

The major U.S. index futures are pointing to a lower opening on Tuesday following the strong upward move seen in the previous session.

Uncertainty may weigh on the markets ahead of the release of reports on consumer and producer price inflation in the coming days.

Indications of rising inflation have recently raised concerns among traders that the Federal Reserve will raise interest rates at faster than previously anticipated rate.

Stocks moved mostly higher over the course of the trading session on Monday, adding to the gains posted last Friday. With the upward move, the major averages further offset the steep losses seen early last week.

The major averages ended the day sharply higher. The Dow soared 410.37 points or 1.7 percent to 24,601.27, the Nasdaq jumped 107.47 points or 1.6 percent to 6,981.96 and the S&P 500 surged up 34.65 points or 1.4 percent to 2,656.00.

The strength on Wall Street came as traders continued to pick up stocks at reduced levels following recent weakness, with the major averages climbing further off the two-month lows set last Thursday.

The major averages added to the gains posted following a volatile session last Friday but remain well off their recent record highs.

Trading activity remained somewhat subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

Economic data is likely to attract attention in the coming days, with reports on producer and consumer prices likely to be in focus amid recent concerns about rising inflation.

Reaction to reports on retail sales, industrial production, housing starts, and homebuilder confidence may also impact trading.

Gold stocks saw substantial strength on the day, with the NYSE Arca Gold Bugs Index surging up by 3.4 percent. The index bounced off its lowest closing level in over a year. The rebound by gold stocks came amid an increase by the price of the precious metal.

Significant strength was also visible among oil service stocks, as reflected by the 2.2 percent jump by the Philadelphia Oil Service Index.

Tobacco, chemical, telecom and computer hardware stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are falling $0.51 to $58.78 a barrel after inching up $0.09 to $59.29 a barrel on Monday. Meanwhile, after jumping $10.60 to $1,331.50 an ounce in the previous session, gold futures are rising $2.50 to $1,328.90 an ounce.

On the currency front, the U.S. dollar is trading at 107.61 yen compared to the 108.66 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2344 compared to yesterday's $1.2292.

Asia

Asian stocks closed broadly higher on Tuesday after the major U.S. averages rose between 1.4 percent and 1.7 percent overnight to rebound from their worst weekly performances in two years.

The day's gains in New York came after the Trump administration unveiled a long-awaited infrastructure plan that includes $200 billion in federal infrastructure spending over 10 years.

Chinese shares rebounded as the global rout faded and data from the People's Bank of China revealed that China's banks lent a record amount of new yuan loans in January.

The benchmark Shanghai Composite index jumped 31.47 points or 1 percent to 3,185.60, while Hong Kong's Hang Seng index surged up 379.90 points or 1.3 percent to 29,839.53.

Meanwhile, Japanese shares gave up initial gains to end lower as traders returned to their desks after a long holiday weekend.

The benchmark Nikkei 225 index dropped 137.94 points or 0.7 percent to 21,244.68 as the dollar fell nearly half a percent to move closer to Friday's five-month low of 108.05 yen. The broader Topix index shed 15.19 points or 0.9 percent to close at 1,716.78.

Exporters ended on a mixed note. Canon lost 1 percent, Sony declined 1.5 percent and Toyota Motor fell as much as 2.5 percent, while Panasonic rose half a percent. Banks Mitsubishi UFJ Financial and Sumitomo Mitsui Financial ended down over 1 percent each.

Fujifilm tumbled 3.2 percent after activist investor Carl Icahn and Darwin Deason urged Xerox shareholders to vote against the Fujifilm deal, saying the transaction "dramatically undervalues Xerox and disproportionately favors Fuji."

Australian shares bounced back in thin trade after Wall Street's three major averages rose for the second day on Monday. The benchmark S&P/ASX 200 index rose 35.20 points or 0.6 percent to 5,855.90 despite some underwhelming earnings reports. The broader All Ordinaries index ended up 37.30 points or 0.6 percent at 5,957.

Mining heavyweights BHP Billiton and Rio Tinto rose over 1 percent each. Annuity provider Challenger, hearing implant maker Cochlear and building materials maker Boral closed in negative territory in view of disappointing interim results.

On the economic front, business confidence in Australia ticked higher in January, the latest survey from the National Australia Bank revealed with an index score of +12, up from the downwardly revised +10 in December.

Europe

European stocks are subdued on Tuesday despite Wall Street striving to recoup more of last week's heavy losses and Asian markets finishing mostly higher.

The euro has strengthened against the dollar ahead of U.S. inflation data due on Wednesday, which may offer further clues on the pace of interest rate hikes in the U.S.

While the U.K.'s FTSE 100 Index is up by 0.3 percent, the French CAC 40 Index is just below the unchanged line and the German DAX Index is down by 0.1 percent.

In economic news, U.K. consumer price inflation came in at 3 percent in January, the same rate as seen in December.

Output price inflation eased to 2.8 percent in January from 3.3 percent a month ago, while the house price index climbed 5.2 percent year-over-year in December, faster than the 5.0 percent rise in November, separate reports showed.

Telenet shares have plunged after the Belgian operator posted muted growth in fourth quarter revenues.

Copper smelter Aurubis has also come under pressure on reports that it is in advanced talks to sell its flat rolled products unit to Wieland-Werke AG.

Meanwhile, integrated steel and mining company ArcelorMittal has risen after its Indian unit submitted an offer for Essar Steel.

Randstad Holding NV has rallied after the world's second-largest staffing company has declared a special dividend after reporting higher net profit for the fourth quarter of 2017.

U.S. Economic Reports

The economic calendar remains quiet on Tuesday, although reports on consumer and producer prices, retail sales, industrial production, and housing starts are likely to attract attention in the coming days.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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