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Futures Pointing To Higher Open After Recovering From Overnight Slump

The major U.S. index futures are currently pointing to a significantly higher open on Tuesday after recovering from an overnight nosedive.

The futures fell sharply overnight as comments from White House trade adviser Peter Navarro seemed to suggest President Donald Trump had decided to terminate the U.S.-China trade deal.

"It's over," Navarro said in response to a question about the trade deal in an interview on Fox News, adding that the "turning point" was China's failure to warn the United States about the coronavirus outbreak.

Navarro subsequently released a statement attempting to clarify his remarks, claiming his initial comments were "taken wildly out of context."

"They had nothing at all to do with the Phase I trade deal, which continues in place," Navarro said. "I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world."

Trump also sought to reassure investors with a post on Twitter declaring the trade deal is "fully intact" and saying he hopes China will "continue to live up to the terms of the Agreement!"

The futures quickly recovered from the overnight slump and have seen further upside since then, reflecting recent upward momentum on Wall Street.

Stocks may continue to benefit from optimism about a quick economic recovery, as traders seem unfazed by the rising number of coronavirus cases and hospitalizations in several states across the country.

Stocks moved mostly higher over the course of the trading day on Monday after showing a lack of direction early in the session. The tech-heavy Nasdaq closed higher for the seventh straight session, reaching a new record closing high.

The major averages all finished the day firmly in positive territory. While the Nasdaq jumped 110.35 points or 1.1 percent to 10,056.47, the Dow climbed 153.50 points or 0.6 percent to 26,024.96 and the S&P 500 advanced 20.12 points or 0.7 percent to 3,117.86.

The strength that emerged on Wall Street came as traders continued to express optimism the U.S. economy will quickly recover from the coronavirus-induced setback.

Recent retail sales and employment data far exceeded estimates, helping reinforce hopes of a V-shaped recovery even as most economists urge caution.

Traders shrugged off a report from the National Association of Realtors showing a continued nosedive in existing home sales in May, as the group's chief economist was confident sales would rebound in the coming months.

NAR said existing home sales plunged by 9.7 percent to an annual rate of 3.91 million in May after plummeting by 17.8 percent to a rate of 4.33 million in April. Economists had expected existing home sales to slump by 4.8 percent to a rate of 4.12 million.

"Sales completed in May reflect contract signings in March and April - during the strictest times of the pandemic lockdown and hence the cyclical low point," said Lawrence Yun, NAR's chief economist.

He added, "Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year."

The economic optimism also overshadowed concerns about 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 suggested he would like to see testing slowed down.

Gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 4 percent. The rally by gold stocks came amid another notable increase by the price of precious metal.

Considerable strength was also visible among software stocks, as reflected by the 2.5 percent jump by the Dow Jones U.S. Software Index. The index ended the session at a new record closing high.

Utilities and retail stocks also saw notable strength on the day, while tobacco stocks showed a significant move to the downside.

Commodity, Currency Markets

Crude oil futures are rising $0.52 to $41.25 a barrel after climbing $0.90 to $40.73 a barrel on Monday. Meanwhile, after jumping $13.40 to $1,766.40 an ounce in the previous session, gold futures are advancing $9.30 to $1,775.70 an ounce.

On the currency front, the U.S. dollar is trading at 106.61 yen compared to the 106.91 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1331 compared to yesterday's $1.1261.

Asia

Asian stocks fluctuated before finishing mostly higher on Tuesday after White House trade advisor Peter Navarro clarified that the U.S.-China trade deal remains in place and that his earlier comments had been taken out of context.

Chinese shares recovered from a weak start to end higher as investors were reassured by U.S. President Trump's assertion that the trade deal between China and the United States remains intact.

The benchmark Shanghai Composite Index edged up 5.35 points, or 0.2 percent, to 2,970.62, while Hong Kong's Hang Seng Index jumped 396.00 points, or 1.6 percent, to 24,907.34.

Japanese shares advanced as tech shares followed their U.S. peers higher following Apple's announcement that it plans to build its own chips for its Mac computers.

The Nikkei 225 Index climbed 111.78 points, or 0.5 percent, to 22,549.05, while the broader Topix closed 0.5 percent higher at 1,587.14.

Tokyo Electron gained 1.8 percent, Advantest added 1.5 percent and Screen Holdings rose 0.6 percent. Automakers Honda Motor, Toyota, Mazda Motor and Nissan gained 1-2 percent.

The manufacturing sector in Japan continued to contract in June, and at a faster rate, the latest survey from Jibun Bank revealed today with a manufacturing PMI score of 28.9, down from 30.3 in May.

Individually, output, new orders, new export orders, employment, backlogs, output prices, input prices and future output all continued to contract.

Japan's services PMI came in at 42.3 in June, up from 26.5 in the previous month. The composite index had a score of 27.8, down from 37.9 a month earlier.

Australian markets fluctuated before finishing modestly higher after a survey showed Australia's private sector rebounded in June, reflecting the loosening of restrictions related to the coronavirus pandemic.

The Commonwealth Bank flash composite output index climbed to 52.6 in June from 28.1 in the previous month. The increase was centered on the service sector, which saw a rise in activity for the first time in five months. Meanwhile, manufacturing production fell at a much softer pace.

The benchmark S&P/ASX 200 Index inched up 9.90 points, or 0.2 percent, to 5,954.40, while the broader All Ordinaries Index ended up 11.30 points, or 0.2 percent, at 6,069.30.

AMP soared 7.9 percent as the Reserve Bank of New Zealand finally agreed to the sale of its life insurance business to British firm, Resolution.

Miners BHP, Fortescue Metals Group and Rio Tinto rose between 0.8 percent and 1.4 percent. Alumina shares rallied 2.1 percent.

Meanwhile, energy stocks such as Woodside Petroleum, Santos and Oil Search fell between 0.6 percent and 0.9 percent, while banks Commonwealth, NAB and Westpac dropped around half a percent.

Retailer Woolworths Group declined 0.8 percent. The retail giant said it expects full-year earnings to be slightly lower than last year and noted that trading so far in the June quarter continued to be strong.

Seoul stocks edged higher after President Trump took to Twitter and clarified that the U.S. trade deal with China is "fully intact" and that he hopes China will continue to "live up to the terms" of the agreement. The benchmark Kospi edged up 4.51 points, or 0.2 percent, to 2,131.24.

Europe

European shares have moved sharply higher on Tuesday even as a number of states in the U.S. continued to report a rise in new coronavirus cases and hospitalizations.

Meanwhile, a closely watched measure of economic activity pointed to a continued rebound for the euro zone in June.

While the German DAX Index has soared by 2.7 percent, the French CAC 40 Index is up by 1.7 percent and the U.K.'s FTSE 100 Index is up by 1.5 percent.

In economic news, the euro area private sector contracted at a slower pace in June as lockdowns to prevent the spread of the coronavirus were further relaxed, flash survey results published by IHS Markit showed.

The flash composite output index advanced more than expected to 47.5 from 31.9 in May. The score was forecast to rise to 42.4. The latest gain took the PMI to its highest level since February, although it still indicated an overall decline in business output.

Output decreased again in both manufacturing and services, with the latter showing a slightly steeper rate of decline.

Elsewhere, an initial 'flash' reading from IHS Markit showed that the U.K. manufacturing price managers' index improved to 50.1 in June from 40.7 in May. Markets had expected a more modest improvement to 45.2.

The services PMI also beat expectations, rising to 47.0 in June from 29.0 in May. Economists had expected the reading to rise to 39.1.

Dutch manufacturer Aalberts has shown a substantial move to the upside on the day after providing a positive trading update.

London Stock Exchange Group shares have also advanced. The European Commission said it has opened an in-depth investigation to assess the exchange operator's proposed acquisition of U.S.-based Refinitiv due to competition concerns.

Food producer Cranswickhas also jumped. The company said that its fiscal 2020 profit before tax grew 20.2 percent to 104.0 million pounds from last year's 86.5 million pounds.

German payments firm Wirecard AG has also moved sharply higher after consecutive plunges amid an ongoing accounting scandal.

Pfeiffer Vacuum Technology has also risen. The manufacturer of vacuum pumps expects sales to be in the range of around 140 million euros to 145 million euros in the second quarter ending June 30, 2020, compared to 157.4 million euros reported last year.

Bayer AG has climbed after a U.S. court blocked California from requiring the company to label its glyphosate-based weed killer, Roundup, with a cancer warning.

On the other hand, Hikma Pharmaceuticals has slumped after Boehringer Ingelheim sold its stake in the British pharmaceutical company.

U.S. Economic Reports

The Commerce Department is scheduled to release its report on new home sales in the month of May at 10 am ET.

Economists expect new home sales to jump by 2.7 percent to an annual rate of 640,000 in May after rising by 0.6 percent to a rate of 623,000 in April.

At 1 pm ET, the Treasury Department is due to announce the results of its auction of $46 billion worth of two-year notes.

Stocks In Focus

Shares of Peloton (PTON) are moving notably higher in pre-market trading after Cowen called the fitness equipment maker its best "SMIDCAP" idea and raised its price target to $70 per share from $54 per share.

Biopharmaceutical company AbbVie (ABBV) is also likely to move to the upside after Atlantic Equities upgraded its rating on the company's stock to Overweight from Neutral.

On the other hand, shares of IHS Markit (INFO) may see initial weakness after the financial information and analytics provider reported better than expected fiscal second quarter earnings but its revenues missed estimates.

Spirit AeroSystems (SPR) may also come under pressure after the aerostructures manufacturer said it is in talks to obtain relief from its lenders after Boeing (BA) directed the company to reduce its 2020 B737 production plan.

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