The major U.S. index futures are pointing to a higher opening on Monday, as signs of a global economic recovery has generated optimism concerning demand for commodities. Manufacturing activity in Europe and Asia has rebounded nicely, adding to recent evidence that growth is solidifying. Additionally, oil is advancing, as cooler than usual winter weather has improved demand outlook for the black gold. That said, traders may exercise caution ahead of several key economic reports to be released over the course of the week.
U.S. stocks gave back some ground in the holiday-shortened week ended December 31st, as uncertainty intensified, given the fluid state of the economy and the run up for most of the past year that created uneasiness among traders.
Amid uncertainty last Monday, the major averages closed modestly higher, with the upside aided by the early momentum built on the back of news suggesting strong holiday sales and positive economic data from Asia. However, the 6-day winning stint led to some profit taking on Tuesday, as stock retreated modestly.
Stocks continued to show a lack of direction on Wednesday despite the release of upbeat manufacturing data from the Chicago region. After showing choppiness, the major averages closed slightly higher.
Although an unexpected decline in weekly jobless claims helped the major averages open little changed on Thursday, selling pressure emerged thereafter, causing the averages to decline steadily throughout most of the session. In late trading, the selling pressure intensified, sending the major averages down by about 1% each.
For the week, the Dow Industrials ended down 0.88%, the S&P 500 Index lost 1.01% and the Nasdaq Composite slid 0.72%.
Among the sector indexes, the Dow Jones Transportation Average, the NYSE Arca Airline Index and the Philadelphia Housing Sector Index lost over 2% each, while the NYSE Arca Gold Bugs Index receded close to 2%. The NYSE Arca Securities Broker/Dealer Index, the KBW Bank Index and the Philadelphia Oil Service Index all moved down over 1%.
Commodity, Currency Markets
Crude oil futures are trading up $1.61 at $80.97 a barrel after the commodity rose $1.78 or 2.27% to $79.36 a barrel in the week ended December 31st. Oil rose moderately on Monday and followed it up with a slight advance on Tuesday. The commodity moved higher yet again on Wednesday and Thursday before closing the holiday-shortened week higher.
Gold futures are currently climbing $21.40 to $1,117.60 an ounce. In the previous week, the precious metal slid $8.60 or 0.78% to $1,096.20 an ounce, as the dollar went from strength to strength during the week.
On the currency front, the U.S. dollar extended its winning streak in the week ended December 31st, gaining 0.65% against the euro to $1.4318. The greenback also advanced against the yen to end 2.13% higher at 93.035 yen.
Currently, the U.S. dollar is trading at 92.773 yen and is valued at $1.4404 versus the euro.
Asia
The major Asian markets closed Monday's session mostly higher, although Hong Kong's Hang Seng Index and Singapore's Straits Times Index closed modestly lower. Stocks got off to a flying start in the first trading session of the New Year, as commodities rose in anticipation of seeing a sustainable recovery.
Japan's Nikkei 225 average opened higher and saw further gains in early trading before moving sideways for the rest of the session to close up 108.35 points or 1.03% at 10,655, representing its highest level in 15 months.
A majority of stocks advanced in the session, with the gains led by Japan Airlines, which surged up over 33% on an announcement that it has secured a $2.2 million credit line from the Development Bank of Japan. Additionally, reports suggested that the beleaguered airliner may be close to striking a $1.3 billion deal with U.S.-based Delta Airlines (DAL). On the other hand, some financial stocks receded.
Australia's All Ordinaries opened lower, but it recovered in early trading. Thereafter, the index traded above the unchanged line before giving back some gains to close up 7.10 points or 0.15% at 4,890. Energy stocks led the day's advance, while financial and healthcare stocks came under selling pressure.
Hong Kong's Hang Seng Index, which held mostly above the unchanged line in the morning, receded in the afternoon to close down 49.22 points or 0.23% at 21,823. The breadth among the index components was even, with twenty stocks ending lower and one ending unchanged, while twenty-one stocks closed higher. Index heavyweights HSBC Holdings and China Mobile ended in negative territory, while financial and some property stocks retreated in the session.
Europe
The major European markets are advancing on Monday, with the averages in the region opening sharply higher and moving sideways thereafter. The buoyancy is being supported by the rally in commodity prices.
Currently, the French CAC 40 Index is advancing 1.17%, the German DAX Index is moving up 0.64% and the U.K.'s FTSE 100 Index is rising 0.73%.
In corporate news, reports suggest that U.S.-based Kraft Foods (KFT) is contemplating to upwardly revise its $16.9 billion offer for Cadbury over the next two weeks, the period during which it is eligible to table a revised bid. Under Kraft's December 4th offer, Cadbury shareholders have until January 5th to tender their shares.
Meanwhile, Royal Bank of Scotland (RBS) said today that its agreement to sell its Pakistani operations has lapsed due to its failure to secure regulatory approval to sell it to MCB Bank. Separately, reports said that Brazilian firm Itau Unibanco may buy stakes in Royal Bank of Scotland and Lloyds Banking Group as the U.K. government eyes to dispose its stakes in these banks.
On the economic front, Eurostat revealed that the euro area's purchasing managers' index stood at a seasonally adjusted 51.6 in December, higher than the November reading of 51.2. Meanwhile, the CDAF/Market Economics survey revealed that the French manufacturing purchasing managers' index rose to 54.7 in December from 54.4 in November. Manufacturing output was higher for the sixth consecutive month.
Meanwhile, the U.K.'s manufacturing purchasing managers' index rose to a seasonally adjusted 54.1 in December from 51.8 in November, according to a survey released by CIPS/Markit survey. The upside was attributed to a greater inflow of new orders. The BME/Markit Economics survey showed that the German manufacturing purchasing managers' index rose to its highest level since May 2008, rising to 52.7 in December from 52.4 in November.
The index for Eurozone investor sentiment rose to minus 3.7 in January from minus 5.5 in December, the Sentix research group said. It was the sixth increase in a row and the best reading since June 2008. The current conditions index of the survey climbed to minus 17.5, the highest since October 2008, from minus 19.5. Meanwhile, the expectations measure increased to 11.25 from 9.5.
U.S. Economic Reports
After two weeks of fairly light news flow on the economic front, action picks up on Main Street, with several key first-tier economic reports scheduled to be released in the unfolding week.
With the tidings from the job market turning out to be less downbeat, traders are now reconciled to the idea of seeing a slow and steady improvement in labor market conditions. Against this backdrop, the week's monthly non-farm payrolls report, the weekly jobless claims report and the ADP's private sector employment survey assume importance. Additionally, traders may also stay focused on the employment components of the Institute for Supply Management's national manufacturing and non-manufacturing surveys.
The results of the ISM's manufacturing and services sector surveys for December, the National Association of Realtors' pending home sales index for November, the results of the announcement of the details of the upcoming Treasury auctions of 3-year notes, 10-year notes and 10-year Treasury Inflation Protected Securities all due to be announced at 11 AM ET on Thursday and 30-year bonds (due to be announced at 9 AM ET on Thursday) are likely to offer additional clues about how the economic environment is panning out.
Traders may also pay attention to the Fed speeches scheduled for the week and the minutes of the December FOMC meeting to be released on Wednesday. The construction spending report, the factory goods orders report and the wholesale inventories report all for November and the Federal Reserve's consumer credit report for November are also likely to be on the radar.
Services activity is expected to have rebounded in December, helped partly by improving freight activity and the continued positive momentum in the financial markets. Consequently, the ISM's non-manufacturing index is likely to move back into expansion territory.
The positive data points from the labor market have increased hopes for a cessation in the job losses that began in January 2008. That said, the unemployment rate could remain elevated for some time, as the workers who had previously given up on their job search are likely to come back to the labor force when they see the improvement in the market.
The results of the manufacturing survey of the Institute for Supply Management, which are based on data compiled from purchasing and supply executives nationwide, are due out at 10 AM ET. Economists expect the index to show a reading of 54 for December.
The manufacturing sector expanded at a slower pace in November, with the manufacturing index falling to 53.6 in November from 55.7 in October. Economists had expected a more modest decline to 55. The production index fell to 59.9 from October's 63.3, but the new orders index rose 1.8 points to 60.3.
Although the employment index fell 2.3 points to 50.8, it remained in expansion zone for the second straight month. The inventories index continued to decline, showing that there was no respite from destocking.
The Commerce Department's construction spending report to be released at 10 AM ET is expected to show a 0.5% decline in spending for November.
Construction spending remained unchanged in October from the previous month. A 0.3% increase in private construction spending was offset by a 0.4% slippage in public construction spending. In the private category, spending on residential construction climbed 4.4% compared to a 2.5% drop in spending on non-residential construction.
Atlanta Federal Reserve Bank President Dennis Lockhart is scheduled to speak on government crisis response to the American Economic Association conference in Atlanta at 10:15 AM ET.
Stocks in Focus
Novartis (NVS) and Alcon (ACL) may see activity after Novartis said it has exercised its option to purchase the remaining shares in Alcon at a price of $180 per share, with about 156 million shares of Alcon to be purchased. On completion of the purchase, Novartis will own approximately a 77% stake in Alcon. Additionally, Novartis announced that it has submitted a proposal to Alcon's board for a merger of Alcon totally into it by acquiring 23% of public traded Alcon shares at $153 per share.
Cablevision (CVC) and Scripps Networks (SNI) could be in focus after Cablevision accused Scripps Networks, which runs thr HGTV and Food Network channels, of holding viewers hostage for negotiating a 200% price increase following the expiration of an earlier fee agreement between both companies at midnight on December 31st, 2009.
Time Warner (TWX) and News Corp. (NWS) are likely to move in reaction to their announcement that both companies agreed on a deal that averted a crisis over the price that Time Warner has to pay News Corp.'s Fox stations for the latter's programs. The companies did not disclose the terms of the deal.
Timken Co. (TKR) may also be in focus after it said it has completed the sale of its Needle Roller Bearings business to Japan's JTEKT Corp. The company received about $330 million, including retained receivables from the sale.
Disney (DIS) is likely to see some strength after it said it has completed the acquisition of Marvel Entertainment (MVL) after Marvel's shareholders approved the transaction. Marvel shareholders will receive $30 per share in cash plus an additional 0.77452 Disney shares for each share they own.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.