logo
Plus   Neg
Share
Email

Mixed Earnings News May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to show a lack of direction after moving notably higher in over the course of the previous session.

Traders may be reluctant to make significant moves as the digest quarterly results from several big-name financial companies.

Shares of JPMorgan Chase (JPM) are seeing some pre-market strength after the financial giant reported better than expected fourth quarter results.

Citigroup (C) may also move to the upside after reporting fourth quarter results that beat analyst estimates on both the top and bottom lines.

On the other hand, shares of Wells Fargo (WFC) are likely to come under pressure after the banking giant reported fourth quarter results that missed expectations.

Financial giants Bank of America (BAC), Goldman Sachs (GS), and Morgan Stanley (MS) are also due to report their quarterly results in the coming days as earnings season picks up steam.

Stocks moved mostly higher over the course of the trading day on Monday, rebounding following the pullback seen last Friday. With the upward move on the day, the Nasdaq and the S&P 500 ended the session at new record closing highs.

The Nasdaq and the S&P 500 saw further upside going into the close, while the narrower Dow posted a more modest gain. While the Dow rose 83.28 points or 0.3 percent to 28,907.05, the Nasdaq jumped 95.07 points or 1 percent to 9,273.93 and the S&P 500 advanced 22.78 points or 0.7 percent to 3,288.13.

The strength on Wall Street came amid continued optimism about impact of the phase one U.S.-China trade deal due to be signed later this week.

Chinese Vice Premier Liu He is scheduled to visit Washington to sign the deal, which is said to include reduced tariffs on Chinese goods in exchange for increased Chinese purchases of U.S. agricultural products.

In an interview with Fox News on Sunday, Treasury Secretary Steven Mnuchin said the agreement calls for China to purchase $40 to $50 billion worth of U.S. agricultural products annually.

Mnuchin described the agreement as "very, very extensive," although the deal will not completely resolve the trade dispute between the U.S. and China.

Stocks saw further upside after various media reports said the Treasury Department plans to drop its designation of China as a "currency manipulator" ahead of the signing of the deal.

A report from the Wall Street Journal said the trade agreement would include a section on Chinese currency practices that addresses many of the concerns raised when the U.S. applied the manipulator designation last August.

The news drew criticism from Senate Minority Leader Chuck Schumer, D-N.Y., who accused President Donald Trump of caving to Chinese President Xi Jinping.

"When it comes to the president's stance on China, Americans are getting a lot of show and very little results," Schumer said in a statement.

Steel stocks turned in some of the market's best performances amid optimism about the impact of the U.S.-China trade deal, with the NYSE Arca Steel Index jumping by 1.8 percent.

Considerable strength also emerged among networking stocks, as reflected by the 1.6 percent gain posted by the NYSE Arca Networking Index.

Chemical, semiconductor and software stocks also saw significant strength on the day, moving higher along with most of the other major sectors.

Meanwhile, gold stocks bucked the uptrend, dragging the NYSE Arca Gold Bugs Index down by 2.6 percent amid a notable decrease by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are climbing $0.60 to $58.68 a barrel after slumping $0.96 to $58.08 a barrel on Monday. Meanwhile, after tumbling $9.50 to $1,550.60 an ounce in the previous session, gold futures are sliding $6.50 to $1,544.10 an ounce.

On the currency front, the U.S. dollar is trading at 110.05 yen compared to the 109.95 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1110 compared to yesterday's $1.1134.

Asia

Asian stocks ended broadly higher on Tuesday, although Chinese and Hong Kong markets fell ahead of the signing of a so-called phase one trade deal between the United States and China on Wednesday.

China's yuan jumped and safe-haven assets slipped after the United States removed the currency manipulator label it imposed on China last summer.

Chinese shares slipped from a two-year high, showing a muted reaction to upbeat trade data. The benchmark Shanghai Composite Index dropped 8.75 points, or 0.3 percent, to 3,106.82, while Hong Kong's Hang Seng Index edged down 69.80 points, or 0.2 percent, to 28,885.14.

Official data showed China's exports rose an annual 7.6 percent in December, marking the first gain in the country's exports since July 2019 and the fastest growth rate since March 2019. At the same time, imports grew 16.3 percent from a year earlier.

Japanese shares advanced as traders returned to their desks after a public holiday on Monday. The Nikkei 225 Index climbed 174.60 points, or 0.7 percent, to 24,025.17. The broader Topix closed 0.3 percent higher at 1,740.53.

Exporters saw broad-based gains as the yen held near an eight-month low versus the dollar. Sony jumped 2.5 percent, Panasonic advanced 1.7 percent, Suzuki Motor gained 1.3 percent and Toyota Motor added 1 percent. Chip-related firm Shin-Etsu Chemical jumped 3.4 percent and Sumco rose 1.2 percent.

Market heavyweight Fast Retailing added 2.2 percent, Fanuc rose 1.2 percent and SoftBank Group soared 3.5 percent.

In economic news, Japan posted a current account surplus of 1,436.8 billion yen in November, up 75 percent from last year, data showed. That exceeded expectations for a surplus of 1,424.8 billion yen following the 1,816.8-billion-yen surplus in October.

Australian markets hit record highs, with financial and mining stocks leading the surge ahead of the signing of the U.S.-China trade deal.

The benchmark S&P/ASX 200 Index advanced 58.50 points, or 0.9 percent, to 6,962.20, while the broader All Ordinaries Index ended up 57.80 points, or 0.8 percent, at 7,078.

Miners BHP, Fortescue Metals Group and Rio Tinto jumped 1-2 percent as investors cheered solid trade data from China. Steel producer BlueScope Steel rallied 3.3 percent.

Banks ANZ, Commonwealth and NAB rose between half a percent and 0.8 percent after S&P Global Ratings said the Australia's pristine AAA sovereign rating is not at "immediate risk" from the fiscal and economic impact of bushfires raging across the country's east coast.

A stronger U.S. dollar helped lift healthcare stocks, with CSL, Cochlear and Resmed rising between 0.3 percent and 0.9 percent. Energy stocks such as Woodside Petroleum and Santos also rose 0.7 percent and 0.9 percent, respectively.

Meanwhile, gold miners Evolution and Newcrest fell over 1 percent as a broader risk-on sentiment sapped demand for the safe-haven bullion.

Seoul stocks ended higher for the fourth straight session amid signs of improvement in trade relations between the United States and China. The benchmark Kospi rose 9.62 points, or 0.4 percent, to 2,238.88, led by automakers. Chipmakers took a breather after a week-long rally.

Europe

European stocks are turning in a lackluster performance as trades take break following the recent rally amid signs of a thaw in relations between the United States and China.

After the U.S. Treasury Department dropped China's designation as a currency manipulator, media reports suggested China has pledged to buy nearly an additional $80 billion of U.S. manufactured goods over the next two years.

The phase one U.S.-China trade deal is due to be signed at the White House on Wednesday.

While the U.K.'s FTSE 100 Index is up by 0.1 percent, the German DAX Index and the French CAC 40 Index are both nearly unchanged.

Specialty chemicals firm Evonik has slumped after its controlling shareholder sold a 5.2 percent stake at a discount.

Dialog Semiconductor has also declined after its preliminary revenue for the fourth quarter fell to $381 million from $431 million last year.

Sugar producer Suedzucker has also shown a notable move to the downside after reporting a wider third quarter net loss.

British gambling firm William Hill has also fallen after the Gambling Commission said it would ban consumers from using credit cards to bet beginning April 14.

On the other hand, Irish builders merchant Grafton Group has soared after announcing better than expected trading results for November and December.

Residential developer Taylor Wimpey has also advanced. The company said that its total home completions in the U.K. in fiscal 2019 increased by about 5 percent with a record order book.

PageGroup plc, a specialist professional recruitment company, has also rallied after unveiling its fourth quarter results.

U.S. Economic Reports

Consumer prices in the U.S. increased by slightly less than anticipated in the month of December, according to a report released by the Labor Department on Tuesday.

The Labor Department said its consumer price index rose by 0.2 percent in December after climbing by 0.3 percent in November. Economists had been expecting another 0.3 percent increase.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent in December after rising by 0.2 percent in November. Core prices had been expected to rise by another 0.2 percent.

At 9 am ET, New York Federal Reserve President John Williams is due to speak at the London School of Economics on behavioral science and organizational culture.

Kansas City Fed President Esther George is scheduled to speak at the Central Exchange on the economic and monetary policy outlook in Kansas City, Missouri, at 1 pm ET.

Stocks In Focus

Shares of Boston Scientific (BSX) are moving significantly lower in pre-market trading after the medical technology company provided disappointing fourth quarter sales guidance.

Video game retailer GameStop (GME) is also likely to come under pressure after reporting a steep drop in holiday sales.

On the other hand, shares of Delta Air Lines (DAL) may see initial strength after the airline reported better than expected fourth quarter results.

For comments and feedback contact: editorial@rttnews.com

Follow RTT
>