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Beyond the Numbers

Futures Pointing To Initial Weakness On Wall Street
9/25/2017 8:55 AM

The major U.S. index futures are pointing to a modestly lower opening on Monday, with the Dow futures down by 19 points.

After ending the previous session modestly lower, stocks turned in a lackluster performance during trading on Friday. The major averages spent much of the day lingering near the unchanged line.

The major averages eventually ended the session mixed. While the Dow edged down 9.64 points or 22.349.59, the Nasdaq inched up 4.23 points or 0.1 percent to 6,426.92 and the S&P 500 crept up 1.62 points or 0.1 percent to 2,502.22.

For the week, the Nasdaq dipped by 0.3 percent, while the Dow rose by 0.4 percent and the S&P 500 inched up by 0.1 percent.

The choppy trading on Wall Street reflected geopolitical concerns amid an escalating war of words between North Korean leader Kim Jong Un and President Donald Trump.

In a statement circulated by state news agency KCNA, Kim described Trump's threat to "totally destroy" North Korea as "mentally deranged behavior."

Kim also called Trump's remarks to the United Nations General Assembly "rude nonsense" and claimed he was not frightened by the president's threat.

"I am now thinking hard about what response he could have expected when he allowed such eccentric words to trip off his tongue," Kim said.

"Whatever Trump might have expected, he will face results beyond his expectation," he added. "I will surely and definitely tame the mentally deranged U.S. dotard with fire."

Trump responded to Kim's statement with a post on Twitter on Friday, calling the North Korean dictator a "madman."

"Kim Jong Un of North Korea, who is obviously a madman who doesn't mind starving or killing his people, will be tested like never before!" Trump tweeted.

The back-and-forth between Trump and Kim came as North Korean Foreign Minister Ri Yong Ho has said his country may consider testing a hydrogen bomb in the Pacific Ocean.

Nonetheless, overall trading activity was somewhat subdued amid a relatively quiet day on the U.S. economic front.

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Electronic storage stocks showed a significant move to the upside, however, with the NYSE Arca Disk Drive Index jumping by 1.8 percent.

Pure Storage (PSTG), Quantum (QTM), and Seagate Technology (STX) turned in some of the storage sector's best performances.

Notable strength was also visible among telecom stocks, as reflected by the 1.1 percent gain posted by the NYSE Arca Telecom Index. The index ended the session at its best closing level in a month.

Sprint (S) led the sector higher after a report from Reuters said the wireless carrier is close to agreeing to tentative terms on a merger with T-Mobile (TMUS).

Oil service, gold and silver, and networking stocks also saw some strength on the day, while steel and utilities stocks moved to the downside.

Commodity, Currency Markets

Crude oil futures are climbing $0.53 to $51.19 a barrel after edging up $0.11 to $50.66 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,295.10, down $2.40 from the previous session’s close of $1,297.50. On Friday, gold rose $2.70.

On the currency front, the U.S. dollar is trading at 112.23 yen compared to the 111.99 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1870 compared to last Friday’s $1.1951.

Asia

Asian stocks turned in a mixed performance on Monday as geopolitical tensions persisted and elections in Germany and New Zealand set the stage for periods of political uncertainty.

German Chancellor Angela Merkel won a fourth term in office on Sunday but will have to govern with a far less stable coalition. In New Zealand, Prime Minister Bill English's National Party won the most votes, but failed to secure a majority in parliament.

Chinese stocks declined, with property developers succumbing to heavy selling pressure after officials imposed a new round of curbs over the weekend to rein in the heated housing market.

The benchmark Shanghai Composite index dropped 11.72 points or 0.4 percent to 3,340.81, while Hong Kong's Hang Seng Index tumbled 380.19 points or 0.4 percent to 27,500.34.

Meanwhile, Japanese shares ended at a new two-year high as the yen weakened on speculation that Japan's prime minister will compile a new economic stimulus package of around 2 trillion yen alongside his expected call for a snap election.

Also helping buoy investor sentiment, the latest survey from Nikkei revealed that activity in Japan's manufacturing sector continued to expand in September.

The Nikkei 225 index rose 101.13 points or 0.5 percent to 20,397.58, its highest level since August 2015. The broader Topix index closed 0.5 percent higher at 1,672.82.

Australian shares closed marginally higher, led by energy stocks as oil extended Friday's gains after oil producers said their commitment to cut production and clear a global cut is working. Santos rose 1 percent and Beach Energy rallied 1.3 percent.

Banks ended mixed, with ANZ rising 0.2 percent and Westpac gaining 0.7 percent, while Commonwealth fell over 1 percent. Miners BHP Billiton, Fortescue Metals Group and Rio Tinto closed flat to slightly higher.

Retail conglomerate Premier Investments dropped as much as 2.6 percent on posting muted growth in annual profit.

Europe

European stocks are also trading mixed on Monday as the results of the German election stoked uncertainty among investors and a report showed Germany's business confidence weakened in September.

Additionally, French President Emmanuel Macron's new centrist political party suffered its first electoral setback in a partial Senate election on Sunday, dealing a blow to the popularity of Macron as he pushes through unpopular reforms.

While the German DAX Index is up by 0.2 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both down by 0.2 percent.

Spain's Ibex 35 has come under pressure on reports of possible delays in the approval of the Spanish government's 2018 Budget Law.

Deutsche Lufthansa shares rallied nearly 2 percent after reports that the German airline group is offering to pay 200 million euros to buy its bankrupt smaller opponent Air Berlin.

Meanwhile, Alstom shares have moved higher after the French speed-train maker confirmed it was in discussions with Siemens about a possible combination with Siemens Mobility Division.

Airbus Group has advanced after the aerospace and defense major is in talks to sell a part or all of Premium Aerotec, a subsidiary that makes large plane components, Die Welt newspaper reported.

Shares of Imagination Technologies Group have soared as much as 28 percent in London after the chip designer agreed to a 182p-a-share takeover by Canyon Bridge.

ABB has edged up slightly after General Electric (GE) agreed to sell its industrial solutions unit to the Swiss engineering firm in a deal valued at $2.6 billion.

U.S. Economic Reports

The economic calendar for this week starts off relatively quiet but picks up in the coming days with the release of reports on new home sales, durable goods orders, and personal income and spending.

At 12:40 pm ET, Chicago Federal Reserve President Charles Evans is due to speak about the economic outlook and monetary policy at an Economic Club of Grand Rapids luncheon in Grand Rapids, Michigan.

Minneapolis Fed President Neel Kashkari is scheduled to participate in a town hall in Grand Forks, North Dakota, as part of the University of North Dakota’s “Eye of the Hawk” lecture series at 6:30 pm ET.
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