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Beyond the Numbers

Futures Pointing To Continued Pullback On Wall Street
1/30/2018 9:02 AM

The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks poised to extend the pullback seen in the previous session.

The downward momentum on Wall Street comes as traders seem likely to continue to cash in on the recent strength in the markets.

Trading activity may remain somewhat subdued, however, as traders look ahead to the Federal Reserve’s monetary policy announcement on Wednesday and the close watched monthly jobs report on Friday.

Following the rally seen last Friday, stocks gave back ground during trading on Monday. The decrease on the day came after the major averages ended the previous session at record closing highs.

The major averages ended the day firmly in negative territory. The Dow slid 177.23 points or 0.7 percent to 26,439.48, the Nasdaq fell 39.27 points or 0.5 percent to 7,466.52 and the S&P 500 dropped 19.34 points or 0.7 percent to 2,852.53.

Profit taking contributed to the weakness on Wall Street, as some traders looked to cash in on the recent strength in the markets.

Selling pressure was somewhat subdued, however, with traders reluctant to sell stocks and miss out on any further upside.

The Federal Reserve's monetary policy announcement on Wednesday and the release of the Labor Department's closely watched monthly jobs report on Friday may also be keeping some traders on the sidelines.

On the U.S. economic front, the Commerce Department released a report showing personal income rose by slightly more than expected in the month of December.

The Commerce Department said personal income climbed by 0.4 percent in December after rising by 0.3 percent in November. Economists had expected another 0.3 percent increase.

The report also said personal spending rose by 0.4 percent in December following a 0.8 percent increase in the previous month. The spending growth matched expectations.

Gold stocks moved sharply lower over the course of the trading session, resulting in a 3.7 percent slump by the NYSE Arca Gold Bugs Index. The weakness among gold stocks comes amid a notable decrease by the price of the precious metal.

Significant weakness was also visible among housing stocks, as reflected by the 3.1 percent drop by the Philadelphia Housing Sector Index.

Energy, commercial real estate and trucking stocks also moved to the downside, moving lower along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are sliding $0.70 to $64.86 a barrel after falling $0.58 to $65.56 a barrel on Monday. Meanwhile, after tumbling $11.80 to $1,340.30 an ounce in the previous session, gold futures are rising $2.80 to $1,343.10 an ounce.

On the currency front, the U.S. dollar is trading at 108.62 yen compared to the 108.96 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2432 compared to yesterday’s $1.2383.

Asia

Asian stocks fell across the board on Tuesday as oil extended declines and U.S. bond yields rose to their highest levels in nearly four years on concerns over higher inflation and a rise in interest rates.

China's Shanghai Composite index dropped 34.81 points or 1 percent to close at 3,488.19, while Hong Kong's Hang Seng index tumbled 359.60 points or 1.1 percent to 32,607.29.

Japanese shares closed lower, with a softer lead from Wall Street, a stronger yen and mixed data releases weighing on the markets.

The Nikkei 225 index fell 337.37 points or 1.4 percent to 23,291.97, extending losses for a fifth straight session. The broader Topix index closed 1.2 percent lower at 1,858.13.

Japanese household spending eased 0.1 percent in December from a year earlier and the unemployment rate rose slightly, while retail sales rose strongly in the month on increased spending on cars and clothes, separate reports showed.

Exporters Sony and Panasonic fell about 2 percent as the dollar eased against the yen. Renesas Electronics shed 0.7 percent after the company denied a report that it was in talks to acquire Maxim Integrated Products Inc. for about $20 billion.

Energy major Inpex lost 2.6 percent and Japan Petroleum Exploration slumped as much as 6 percent after crude oil prices fell overnight. Japan Display gave up 0.8 percent on reports that Apple Inc. will slash its production target for its iPhone X.

Australian shares fell sharply, dragged down by banks amid expectations that central banks globally will reduce stimulus, buoyed by improving macroeconomic conditions.

Investors ignored the latest survey from National Australia Bank showing that business confidence in Australia saw its biggest monthly rise since July in December.

The benchmark S&P/ASX 200 index dropped 52.60 points or 0.9 percent to 6,022.80, while the broader All Ordinaries index ended down 52.30 points or 0.9 percent at 6,135.30.

Banks ANZ, NAB and Westpac fell between 0.4 percent and 0.7 percent, while mining giant BHP Billiton declined 1.3 percent and Rio Tinto shed 0.7 percent after a drop in Chinese iron ore futures.

Fortescue Metals slid 0.4 percent after the company reported an 8 percent decline in iron ore shipments for the December quarter. Gold miner Newcrest Mining retreated 1.8 percent after keeping its full-year guidance unchanged.

Energy majors Oil Search, Origin Energy, Woodside Petroleum and Santos dropped 1-2 percent as oil prices fell for a second day on concerns over rising U.S. output. Education provider Navitas plunged 9.4 percent after reporting a steep fall in revenue and profits for the first half of the year.

Europe

European stocks have fallen on Tuesday as rising bond yields as well as concerns over valuations becoming increasingly stretched has dented investors' appetite for riskier assets.

While the French CAC 40 Index is down by 0.5 percent, the German DAX Index is down by 0.6 percent and the U.K.’s FTSE 100 Index is down by 0.7 percent.

Banks are mostly lower, with Deutsche Bank, Societe Generale, Barclays and Royal Bank of Scotland losing 1-2 percent.

Dutch consumer electronics giant Philips Electronics NV has come under pressure despite the company reporting significantly higher profits in its fourth quarter.

Loomis has tumbled after the Swedish support services firm reported fourth quarter earnings that missed analysts' estimates.

Meanwhile, Swiss watch and jewelry maker Swatch Group has rallied after its fiscal 2017 net income grew 27.3 percent from last year.

U.S. Economic Reports

At 10 am ET, the Conference Board is scheduled to release its report on consumer confidence in the month of January.

The consumer confidence index is expected to rise to 123.6 in January after dipping to 122.1 in December.
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