Market Analysis

Beyond the Numbers

Bargain Hunting May Lead To Early Strength On Wall Street
5/24/2016 8:45 AM

The major U.S. index futures are pointing to a higher opening on Monday, as traders may look to do some bargain hunting following recent weakness. However, trading activity may be somewhat subdued ahead of the release of some key economic data in the coming days as well as a speech by Federal Reserve Chair Janet Yellen.

U.S. stocks barely budged Monday amid trepidation about a possible June interest rate hike by the Federal Reserve. The S&P 500 lost 4 points, or 0.2% to close at 2,048, the Dow Jones Industrial Average fell 8 points or 0.1% to finish at 17,493 and the Nasdaq eased 4 points or 0.1% to close at 4,766.

The Fed is moving closer to "slow normalization" of interest rates, St. Louis Fed President James Bullard said in Beijing Monday.

"By nearly any metric, U.S. labor markets are at or beyond full employment," Bullard said. "This may put upward pressure on inflation going forward."

Currency, Commodity Markets???

Crude oil futures for June delivery are climbing $0.31 to $48.39 a barrel after slipping $0.33 to $48.08 a barrel on Monday. Meanwhile, gold futures are currently trading at $1,238.60 an ounce, down $12.90 from the previous session’s close of $1,251.50 an ounce. On Monday, gold dipped $1.40.

On the currency front, the U.S. dollar is trading at 109.71 yen compared to the 109.24 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1166 compared to yesterday’s $1.122.


Asian stocks moved mostly lower on Tuesday, led by Japan and China, as investors worried about the possibility of another U.S. interest rate increase as early as June. Weak commodity prices also weighed on resources stocks.

Investors preferred to stay on the sidelines ahead of a speech by U.S. Federal Reserve Chair Janet Yellen later this week, as they attempt to gauge whether Fed officials will favor an interest rate hike in June.

China's Shanghai Composite index fell 21.98 points or 0.77 percent to finish at 2,821.67. Meanwhile, Hong Kong's Hang Seng index rose 21.40 points or 0.11 percent to close at 19,830.43.

Japanese shares slid in thin trading for the second straight day as a stronger yen dragged down exporters' shares. Investors also treaded cautiously ahead of the Group of Seven summit starting in Japan on Thursday.

The benchmark Nikkei 225 Index fell 155.84 points or 0.94 percent to 16,498.76 and the broader Topix Index finished 0.91 percent lower at 1,326.50.

Automaker Toyota lost 1.4 percent, energy explorer Inpex Corp declined 1.8 percent and market heavyweight Fast Retailing slipped 1.1 percent. Tractor maker Kubota Corp.'s shares fell 4.3 percent.

Australian shares closed lower for a second straight day after the Reserve Bank of Australia's Governor Glenn Stevens defended the central bank's inflation target between 2 and 3 percent. In addition, weak iron ore and crude oil prices weighed on resources stocks.

The benchmark S&P/ASX 200 Index dropped 23.30 points or 0.44 percent to 5,295.60 and the broader All Ordinaries Index shed 23.00 points or 0.43 percent to close at 5,361.90.


European markets have shown a notable move to the upside during trading on Tuesday after moving to the downside in the previous session.

While the U.K.’s FTSE 100 Index is up by 1 percent, the German DAX Index is up by 1.4 percent and the French CAC 40 Index is up by 1.7 percent.

The strength in the European markets has been led by banking, resource, and insurance stocks. Home improvement retailer Kingfisher is also posting a strong gain after reporting a jump in first quarter sales.

U.S. Economic Reports?

The Commerce Department is scheduled to release its report on new home sales in the month of April at 10 am ET. New home sales are expected to climb to an annual rate of 523,000.

New home sales fell 1.5 percent to an annual rate of 511,000 in March from a revised rate of 519,000 in February. The decrease surprised economists, who had expected new home sales to climb to a rate of 522,000 from the 512,000 originally reported for the previous month.

Despite the monthly decrease, new home sales were still up by 5.4 percent compared to a rate of 485,000 in the same month a year ago.

At 1 pm ET, the Treasury Department is due to release the results of auction of $26 billion worth of two-year notes.
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