Market Analysis

Beyond the Numbers

Futures Pointing To Higher Open On Wall Street
10/20/2020 9:13 AM

The major U.S. index futures are currently pointing to a higher open on Tuesday following the weakness seen in the previous session.

The progress on stimulus talks, data on building permits, earnings and other corporate news are likely to set the trend for the market over the course of the day's session.

Procter & Gamble Co. (PG) reported a 19 percent increase in profit for the first quarter of fiscal 2021 from last year. Revenue rose 8.5 percent to $19.32 billion in the latest quarter from $17.80 billion last year.

The Travelers Companies, Inc. (TRV) reported third quarter core income per share of $3.12, compared to $1.43, prior year.

International Business Machines Corp. (IBM) reported third-quarter profit of $1.70 billion or $1.89 per share, up from $1.67 billion or $1.87 per share last year. That was in line with expectations. IBM's adjusted earnings were $2.58 per share for the period, down from $2.68 per share last year.

Stocks showed a lack of direction early in the trading session on Monday but pulled back sharply over the course of the day. The major averages all showed notable moves to the downside after ending last Friday's trading mixed.

The major averages finished the session not far off their worst levels of the day. The Dow tumbled 410.89 points or 1.4 percent to 28,195.42, the Nasdaq plunged 192.67 points or 1.7 percent to 11,478.88 and the S&P 500 slumped 56.89 points or 1.6 percent to 3,426.92.

The weakness that emerged on Wall Street reflected concerns about whether lawmakers in Washington will reach an agreement on a new stimulus bill.

In a post on Twitter, House Speaker Nancy Pelosi's deputy chief of staff Drew Hammill revealed that the Democratic leader spoke with Treasury Secretary Steven Mnuchin for just over an hour on Saturday.

"While there was some encouraging news on testing, there remains work to do to ensure there is a comprehensive testing plan that includes contact tracing and additional measures to address the virus' disproportionate impact on communities of color," Hammill tweeted.

Hammill said that there remains an array of additional differences that must be addressed in a comprehensive manner in the next 48 hours.

"Decisions must be made by the White House in order to demonstrate that the Administration is serious about reaching a bipartisan agreement that provides for Americans with the greatest needs during the pandemic," Hammill said.

On the U.S. economic front, homebuilder confidence climbed to another new record high in the month of October, according to a report released by the National Association of Home Builders.

The report said the NAHB/Wells Fargo Housing Market Index rose to 85 in October from 83 in September. Economists had expected the index to come in unchanged.

"Traffic remains high and record-low interest rates are keeping demand strong as the concept of 'home' has taken on renewed importance for work, study and other purposes in the Covid era," said NAHB Chairman Chuck Fowke.

He added, "However, it is becoming increasingly challenging to build affordable homes as shortages of lots, labor, lumber and other key building materials are lengthening construction times."

Oil stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Oil Index down by 2.3 percent.

The sell-off by oil stocks came amid a modest decrease by the price of crude oil, with crude for November delivery edging down $0.05 to $40.83 a barrel.

Considerable weakness was also visible among gold stocks, as reflected by the 2 percent slump by the NYSE Arca Gold Bugs Index. The weakness in the sector came despite an increase by the price of gold.

Housing, Software and tobacco stocks also saw significant weakness on the day, while airline stocks showed a strong move to the upside.

Commodity, Currency Markets

Crude oil futures are slipping $0.26 to $40.57 a barrel after edging down $0.05 to $40.83 a barrel on Monday. Meanwhile, after rising $5.30 to $1,911.70 an ounce in the previous session, gold futures are falling $4.90 to $1,906.80 an ounce.

On the currency front, the U.S. dollar is trading at 105.69 yen compared to the 105.43 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1813 compared to yesterday’s $1.1769.


Asian stocks ended mixed on Tuesday as Europe reported record daily coronavirus infections and investors waited for fresh news on U.S. fiscal stimulus ahead of the deadline to reach an agreement.

There were reports that U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin "continued to narrow their differences" on the virus relief package.

China's Shanghai Composite index inched up 15.44 points, or 0.47 percent, to 3,328.10 as the People's Bank of China left its benchmark lending rates unchanged for the sixth consecutive month, as widely expected.

The one-year loan prime rate was retained at 3.85 percent and the five-year loan prime rate was maintained at 4.65 percent. Hong Kong's Hang Seng index ended 0.11 percent higher at 24,569.54.

Japanese stocks ended lower as Covid-19 cases continued to rise in Europe and U.S. stimulus talks dragged on. The Nikkei average slid 104.09 points, or 0.44 percent, to 23,567.04, while the broader Topix index closed 0.75 percent lower at 1,625.74.

Japan Exchange Group declined 1.5 percent amid reports that the Financial Services Agency would conduct an on-site investigation of the Tokyo Stock Exchange and will review in detail the cause of a system failure that caused a full-day trade suspension earlier this month.

East Japan Railway Co fell 4.6 percent and Central Japan Railway Co lost 3.4 percent, while Sony Corp advanced 1.7 percent and Fanuc rose 1 percent.

Australian markets fell on weak offshore leads ahead of a deadline for a new fiscal stimulus deal from Washington.

The benchmark S&P/ASX 200 index dropped 44.80 points, or 0.72 percent, to 6,184.60, while the broader All Ordinaries index ended down 38.80 points, or 0.60 percent, at 6,396.80.

BHP gave up 1.6 percent after the mining giant said its December quarter iron ore production will be affected by work linking its Mining Area C and South Flank projects in Western Australia. Rio Tinto shed 1.5 percent, tracking weak metal prices.

The big four banks fell between 1 percent and 1.4 percent. Buy-now-pay-later firm Afterpay surged 4.5 percent after it joined forces with banking giant Westpac to offer daily transaction accounts and budgeting tools.

Seoul stocks rose for the second day running on hopes that U.S. lawmakers are inching closer to a possible agreement on the new fiscal stimulus bill. The Kospi average ended a choppy session up 11.67 points, or 0.50 percent, at 2,358.41.

Market bellwether Samsung Electronics gained 1.5 percent. No.2 chipmaker SK Hynix dropped 1.7 percent after it agreed to buy Intel corp.'s (INTC) NAND memory and storage business for US$9 billion.

New Zealand shares bucked weak global cues to end notably higher. The benchmark NZX 50 index rose 76.80 points, or 0.62 percent, to 12,462.05. Port of Tauranga rallied 3.5 percent and Infratil advanced 1.7 percent.


European stocks were mixed on Tuesday as worries over the spread of new coronavirus cases offset investor optimism over U.S. stimulus deal talks.

Parts of the U.K. and Spain went into lockdown while France is imposing curfews after seeing a massive increase in the number of people hospitalized.

Ireland announced some of Europe's strictest constraints, telling people not to travel more than five kilometers from home in a bid to combat a rise in infections. New restrictions were also approved in Italy's northern Lombardy region.

The pan European Stoxx 600 edged up 0.1 percent to 367.34 after closing 0.2 percent lower on Monday. The German DAX slipped 0.2 percent, while France's CAC 40 index rose 0.4 percent and the U.K.'s FTSE 100 was up 0.2 percent.

The British pound fluctuated versus the euro amid a lack of progress in the Brexit talks.

The U.K. government said that talks with Chief EU Negotiator Michel Barnier were constructive, but there was still no basis to resume official negotiations. The official British position remains that the EU first needs to make concessions.

Remy Cointreau declined 1.5 percent. The French wine and spirits company reported that its second-quarter total sales declined 6.6 percent.

UBS AG rallied 2.7 percent. The Swiss banking giant pledged to boost payouts after its quarterly profit nearly doubled.

Logitech International soared 21 percent after the Swiss-American computer peripheral maker reported a 75 percent jump in quarterly sales.

Dufry climbed 2.3 percent after Chinese e-commerce giant Alibaba Group said it is taking a stake of 6.1 percent in the company as part of a roughly $900m capital increase.

Hargreaves Lansdown rose about 1 percent after the financial services company signed a pact with its billionaire co-founder and largest shareholder Peter Hargreaves, which will allow him some representation on the board.

Consumer products company Reckitt Benckiser rallied 1.8 percent after lifting its FY20 revenue growth view.

Luxury car maker BMW edged up slightly after it reported an increase in free cash flow for the automotive segment for the third quarter 2020.

Biopharmaceutical lab equipment maker Sartorius climbed 3.2 percent. The company reported that its nine-month earnings and sales grew in significant double-digit rates with high demand for nearly entire product range.

Remote software provider TeamViewer lost 7 percent after Permira sold an 11 percent stake at an 8 percent discount to Monday's closing price.
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