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Futures Pointing To Initial Strength On Optimism About Avoiding Shutdown

The major U.S. index futures are pointing to a higher opening on Tuesday, with stocks likely to move to the upside following the lackluster performance seen in the previous session.

Optimism lawmakers will manage to avoid another government shutdown may generate early buying interest after negotiators reached a tentative agreement on border security.

Senate Appropriations Committee Chairman Richard Shelby, R-Ala., a lead Republican negotiator, said the two sides have reached an "agreement in principle."

The agreement reportedly includes $1.4 billion for physical barriers on the border, well short of the $5.7 billion President Donald Trump has demanded for construction or a border wall.

Democrats have also purportedly agreed to drop their demand to reduce the number of illegal immigrants who can be detained by Immigration and Customs Enforcement.

Shelby said the White House has been consulted throughout the negotiations, although it remains to be seen if Trump will sign off on the deal.

Trump continued to tout the success of walls during a rally in the border town of El Paso, Texas, on Monday, claiming sections of the wall are already being built or refurbished despite the dispute with Democrats.

The news comes as lawmakers face a deadline of midnight on Friday to pass a spending bill and avoid another government shutdown.

Stocks showed a lack of direction over the course of the trading session on Monday after failing to sustain an initial move to the upside. The major averages spent the day bouncing back and forth across the unchanged line.

Eventually, the major averages closed mixed for the second consecutive session. While the Dow dipped 53.22 points or 0.2 percent to 25,053.11, the Nasdaq edged up 9.71 points or 0.1 percent to 7,307.90 and the S&P 500 inched up 1.92 points or 0.1 percent to 2,709.80.

The choppy trading on Wall Street came amid uncertainty ahead of the next round of trade talks between the U.S. and China due to take place later this week.

Treasury Secretary Steven Mnuchin will lead the U.S. delegation to Beijing as the world's two largest economies seek to reach a trade deal before an early March deadline.

A report from Axios said Trump's advisers have informally discussed holding a summit with Chinese President Xi Jinping at Mar-a-Lago next month.

Two administration officials with direct knowledge of the internal discussions told Axios the meeting could come as soon as mid-March but stressed that nothing is set.

The report comes after Trump confirmed last week that he would not meet with Xi ahead of the deadline, when a jump in tariffs on Chinese goods is currently set to take effect.

Trump could delay the tariff increase if the talks between U.S. and Chinese officials continue to make progress toward a trade deal.

A lack of major U.S. economic data also kept traders on the sidelines, although reports on consumer and producer price inflation, import and export prices and industrial production are likely to attract attention in the coming days.

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

Transportation stocks showed a notable move to the upside, however, with the Dow Jones Transportation Average climbing by 1.3 percent to a two-month closing high.

Considerable strength also emerged among natural gas stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Natural Gas Index. The index rebounded after ending last Friday's trading at its lowest closing level in a month.

The strength in the natural gas sector came amid an increase by the price of natural gas, with natural gas for March delivery rising $0.059 to $2.642 per million BTUs.

On the other hand, tobacco stocks showed a significant move to the downside, dragging the NYSE Arca Tobacco Index down by 1.2 percent. With the drop, the index pulled back off the nearly three-month closing high set in the previous session.

Gold stocks also came under pressure as the trading day progressed, moving lower along with the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are surging up $1.16 to $53.57 barrel after falling $0.31 to $52.41 a barrel on Monday. Meanwhile, after sliding $6.60 to $1,311.90 ounce in the previous session, gold futures are rising $4.30 to $1,316.20 an ounce.

On the currency front, the U.S. dollar is trading at 110.41 yen compared to the 110.38 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1295 compared to yesterday's $1.1276.

Asia

Asian stocks rose broadly on Tuesday as another round of U.S.-China trade talks got underway in Beijing and U.S. congressional negotiators reached an agreement in principle to fund the government and avoid another shutdown ahead of a midnight deadline on Friday.

Chinese shares extended gains for the fourth straight session as Beijing vowed policy support for the healthcare sector.

The benchmark Shanghai Composite Index climbed 18.00 points or 0.7 percent to 2,671.89, while Hong Kong's Hang Seng Index edged up 27.49 points or 0.1 percent to 28,171.33.

Japanese shares led regional gains as markets reopened after being closed for the National Foundation Day holiday on Monday.

The Nikkei 225 Index spiked 531.04 points or 2.6 percent to 20,864.21, and the broader Topix surged up 33.20 points or 2.2 percent to 1,572.60.

Nissan Motor rose 1.9 percent before unveiling its earnings later in the day. Honda Motor gained 0.8 percent and Toyota added 2.4 percent.

Chipmaker Renesas Electronics soared 16.3 percent, while Toshiba lost 5.9 percent on a Nikkei report that the conglomerate is preparing to cut its full-year profit forecast by at least half.

Australian stocks eked out modest gains on optimism over the U.S.-China trade talks. Financials led the surge after investment bank Macquarie Group reiterated its profit guidance for another record year.

The benchmark S&P/ASX 200 Index rose 18.30 points or 0.30 percent to 6,079.10, while the broader All Ordinaries Index ended up 20.10 points or 0.3 percent at 6,148.70.

Macquarie Group, Australia's biggest investment bank, jumped 2.2 percent. In the healthcare sector, heavyweight CSL advanced 1.3 percent ahead of its half-yearly results.

Santos, Oil Search and Origin Energy climbed 1-2 percent as oil prices edged up, drawing support from OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela. Mining stocks ended on a mixed note.

Toll road operator Transurban declined 1.9 percent after it reported a nearly 62 percent drop in first-half profits following its costly acquisition of Sydney's WestConnex motorway scheme.

In economic news, the total number of home loans issued in Australia fell a seasonally adjusted 6.1 percent in December, a government report showed, missing expectations for a drop of 2.0 percent.

Meanwhile, a key measure of Australian business conditions showed a welcome bounce in January after an alarmingly sharp drop in the previous month.

Seoul stocks finished higher, led by tech heavyweights. The benchmark Kospi gained 9.74 points or 0.5 percent to end at 2,190.47. Samsung Electronics rallied 2.3 percent, SK Hynix added 2.4 percent and LG Electronics jumped 3.8 percent.

Europe

European shares have moved mostly higher on Tuesday as investors bet on an end to the trade war between the U.S. and China.

Two days of high-level talks starting Thursday would involve U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He.

Sentiment also got a boost after U.S. congressional negotiators reached an agreement to avoid a new government shutdown and provide border security funding.

The German DAX Index is jumping by 1.1 percent and the French CAC 40 Index is advancing by 0.9 percent, although the U.K.'s FTSE 100 Index has bucked the uptrend and edged down by 0.1 percent.

Tire maker Michelin Cie Des Estb has soared after its sales for fiscal year 2018 rose 4.1 percent at constant exchange rates.

Dutch staffing firm Randstad has also moved sharply higher on the day after its fourth quarter results beat forecasts.

On the other hand, German travel and tourism company TUI has come under pressure after its quarterly loss widened.

Indivior has also fallen in London. A U.S. Court has denied the company's motion to stay issuance of the mandate following the prior ruling vacating the preliminary injunction granted against Dr. Reddy's Laboratories on SUBOXONE Film.

Industrial and technology group ThyssenKrupp has also dropped after the company warned of growing uncertainties despite reporting a rise in its fiscal first quarter net profit and confirming its full-year forecast.

U.S. Economic Reports

The Labor Department is scheduled to release the results of its Job Openings and Labor Turnover Survey for December at 10 am ET. Job openings are expected to rise to 6.960 million in December after slipping to 6.888 million in November.

At 12:45 pm ET, Federal Reserve Chairman Jerome Powell is due to deliver a speech on economic development in high poverty rural communities at the Hope Enterprise Corporation Rural Policy Forum at Mississippi Valley State University at Itta Bena, Mississippi.

Kansas City Fed President Esther George is due to deliver a speech on "Charting America's Economic Course" at the Kansas City Public Library in Kansas City at 5:30 pm ET.

At 6:30 pm ET, Cleveland Fed President Loretta Mester is scheduled to deliver a speech about the economic outlook and monetary policy at the Xavier University and Financial Executives International Cincinnati Chapter meeting in Cincinnati, Ohio.

Stocks In Focus

Shares of Coty (COTY) are moving sharply higher in pre-market trading after investment firm JAB Holding Co. said an affiliate would shortly commence a tender offer to acquire up to 150 million additional shares of the beauty products company for $11.65 per share in cash.

Video game giant Electric Arts (EA) is also likely to see initial strength after revealing its new game Apex Legends already has more than 25 million registered users.

Shares of Under Armour (UAA) may also move to the upside after the athletic apparel maker reported fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, shares of Molson Coors (TAP) may come under pressure after the brewer reported better than expected fourth quarter earnings but said it would restate its results for 2016 and 2017 due to accounting errors.

Biotechnology company Gilead Sciences (GILD) may also see initial weakness after a late-stage study of its drug to treat a type of chronic liver disease did not meets its main goal.

Shares of Cisco Systems (CSCO) could also move to the downside after Morgan Stanley downgraded its rating on the networking giant to Equal-Weight from Overweight.

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