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Economic Optimism May Lead To Strength On Wall Street

The major U.S. index futures are currently pointing to a higher opening on Monday, with stocks likely to move back to the upside following the pullback seen in the previous session.

The upward momentum on Wall Street comes as traders continue to express optimism about an economic recovery despite rising coronavirus cases in the U.S. and other parts of the world.

According to the World Health Organization, more than 183,000 new coronavirus infections were reported globally on Sunday, the biggest single-day increase since the outbreak began.

Brazil has become a major coronavirus hotspot in recent weeks and led the spike in new infections with 54,771 new cases.

The U.S. was next with 36,617 new cases as states in the South, West and Midwest see surges in new infections following recent reopening.

During his speech in Tulsa, Oklahoma, on Saturday, President Donald Trump blamed the jump in new cases on increased testing and suggesting he would like to see testing slowed down.

Not long after the start of trading, the National Association of Realtors is scheduled to release its report on existing home sales in the month of May.

U.S. stocks tumbled into the red around noon, failing to hold strong early gains, and despite a couple of attempts to rebound into positive territory, ended on a weak note on Friday.

Optimism about an economic recovery in the wake of recent strong data on employment and retail sales set up a firm start for stocks. A Bloomberg report that said China will likely accelerate purchases of American farm goods to comply with the phase one trade deal also helped the markets.

However, reports showing a surge in coronavirus infections in several states in America and the World Health Organization's warning that the pandemic is "accelerating and the world is in a new and dangerous phase" unsettled investors.

Among the major averages, the tech-heavy Nasdaq managed to eke out a small gain, inching up 3.07 points or less than a tenth of a percent to 9,946.12. The Dow slumped 208.64 points or 0.8 percent to settle at 25,871.46, while the S&P 500 slid 17.60 points or 0.6 percent to 3,097.74.

The Dow and the S&P 500 added about 1 percent and 1.9 percent, respectively for the week, while the Nasdaq jumped 3.7 percent.

The Trump administration has declared there will not be another shutdown, but Apple Inc. (AAPL) announced that it is temporarily shuttering stores again in U.S. states where coronavirus cases have been spiking in recent weeks.

Texas and Arizona reported record spikes in new cases on Friday. Florida, California, South Carolina and North Carolina were among the other states to report a jump in new cases.

Boeing (BA), Cisco Systems (CSCO), Nike (NKE), General Electric (GE), IBM (IBM) and Coca-Cola (KO) were some of the major losers in the session.

The market also reacted to Boston Federal Reserve President Eric Rosengren's remarks that the U.S. economy may not see a fast recovery and that it would need more support from the Fed and Congress. He made these comments in a webcast to the Providence Chamber of Commerce.

"Unemployment remains very high, and because of the continued community spread of the disease and the acceleration of new cases in many states, I expect the economic rebound in the second half of the year to be less than was hoped for at the outset of the pandemic," Rosengren said.

Commodity, Currency Markets

Crude oil futures are sliding $0.40 to $39.35 a barrel after climbing $0.91 to $39.75 a barrel last Friday. Meanwhile, after spiking $21.90 to $1,753 an ounce in the previous session, gold futures are jumping $16.20 to $1,769.20 an ounce.

On the currency front, the U.S. dollar is trading at 106.88 yen versus the 106.87 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1215 compared to Friday's $1.1178.

Asia

Asian stocks ended flat to slightly lower on Monday as rising coronavirus cases in the U.S. and other parts of the world diminished hopes of a quick economic recovery.

Chinese shares ended on a flat note after the country's central bank kept its benchmark lending rate steady for the second month in a row but pumped cash into the banking system via reverse repos to maintain liquidity.

Meanwhile, an official reportedly said Sunday that the Chinese capital of Beijing is capable of screening almost 1 million people a day for the coronavirus.

The benchmark Shanghai Composite Index ended down 2.36 points, 0.1 percent, at 2,965.27, while Hong Kong's Hang Seng Index gave up 132.55 points, or 0.5 percent, to close at 24,511.34.

Japanese shares ended a choppy session slightly lower after reports showed a surge in coronavirus infections in several U.S. states. The Nikkei 225 Index ended down 41.52 points, or 0.2 percent, at 22,437.27, while the broader Topix closed 0.2 percent lower at 1,579.09.

Japan Airlines fell over 1 percent on news it is looking to raise 500 billion yen from lenders. The airline also posted its first quarterly loss since relisting its shares in 2012.

Australian markets recovered from an early slide to end on a flat note. The benchmark S&P/ASX 200 Index crept up 1.90 points, or less than a tenth of a percent, to 5,944.50 as the country's second most populous state Victoria recorded 16 new cases of Covid-19 overnight, the highest in more than two months. The broader All Ordinaries Index edged down 3.60 points, 0.1 percent, to 6,058.

The big four banks rose between half a percent and 1.2 percent, while energy companies such as Origin Energy and Oil Search fell 2.3 percent and 1.4 percent, respectively.

Transurban Group slumped 4.1 percent after the toll road operator said it would pay a reduced second-half dividend amid a fall in traffic volumes due to the coronavirus pandemic.

Gold miner Ramelius Resources spiked 16.8 percent after upgrading its full-year production guidance. Austal soared 9.5 percent after the U.S. government agreed to invest $50 million in Austal USA.

Metcash rose over 1 percent despite reporting a full-year loss. James Hardie Industries jumped 7.3 percent after the building products maker raised its earnings margin outlook for the June quarter.

Seoul stocks ended notably lower as investors fretted over a second wave of new coronavirus cases both at home and abroad. The benchmark Kospi dropped 14.59 points, or 0.7 percent, to 2,126.73.

South Korea added 67 new cases Saturday, the highest in 23 days, and 48 new infections Sunday, raising the accumulative total to 12,421.

According to the World Health Organization, there were 183,020 new infections globally in the last 24 hours, the largest single-day jump in coronavirus cases.

In economic news, official data showed that South Korean exports fell 7.5 percent year-on-year in the first 20 days of June, dashing hopes for a quick economic recovery.

Europe

European shares have seen considerable volatility on Monday as traders weigh hopes for a quick economic recovery against rising coronavirus infections in the U.S. and elsewhere across the world.

The World Health Organization reported a record increase in global coronavirus cases on Sunday and warned the pandemic is entering a "new and dangerous" phase.

Currently, the major European markets are moderately lower. While the French CAC 40 Index is down by 0.5 percent, the German DAX Index is down by 0.4 percent and the U.K.'s FTSE 100 Index is down by 0.3 percent.

Wirecard AG has plunged to extend last week's losses. The scandal-hit payment firm withdrew its preliminary results for the financial year 2019 and the first quarter of 2020, saying that the missing 1.9 billion euros of cash on its balance sheet probably does not exist.

Airline Lufthansa has also moved sharply lower as its top shareholder, Heinz Hermann Thiele, fights a bailout package.

JD Sports Fashion has also fallen. The retailer confirmed that it has considered a number of strategic options for Go Outdoors and that Go Outdoors' directors have lodged Notice in Court.

Meanwhile, SEGRO has risen. The property development and investment company has announced the sale of City Park Vienna in Austria to Nuveen Real Estate for 65 million euros, in line with December 2019 book value. With the disposal, SEGRO exits from Austria, in line with its strategy.

U.S. Economic Reports

The National Association of Realtors is scheduled to release its report on existing home sales in the month of May at 10 am ET.

Economists expect existing home sales to tumble by 4.8 percent to an annual rate of 4.12 million in May after plunging by 17.8 percent to a rate of 4.33 million in April.

Stocks In Focus

Shares of Virgin Galactic (SPCE) are moving sharply higher in pre-market trading after the spaceflight company signed an agreement with NASA's Johnson Space Center to encourage commercial participation in orbital human spaceflight to the International Space Station.

Online gambling company DraftKings (DKNG) may also see initial strength after Jefferies initiated coverage of the company's stock with a Buy rating.

Shares of Gap (GPS) are also seeing significant pre-market strength after Wells Fargo upgraded its rating on the retailer's stock to Overweight from Undereweight.

On the other hand, shares of Tyson Foods (TSN) may move to the downside amid news China suspended poultry imports from the company's plant in Arkansas due to concerns about an outbreak of coronavirus at the facility.

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