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Beyond the Numbers

Futures Pointing To Initial Strength On Wall Street
6/8/2021 8:46 AM

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

Continued optimism about the global economic outlook may contribute to strength on Wall Street despite lingering concerns about inflation and the Federal Reserve’s monetary policy plans.

Stocks showed a lack of direction over the course of the trading session on Monday before eventually ending the session mixed. The lackluster performance came on the heels of the advance seen last week.

While the tech-heavy Nasdaq climbed 67.23 points or 0.5 percent to 13,881.72, the Dow fell 126.15 points or 0.4 percent to 34,630.24 and the S&P 500 edged down 3.37 points or 0.1 percent to 4,226.52.

The choppy trading on Wall Street came as traders seemed reluctant to make significant moves after last week's advance lifted the major averages to their best closing levels in a month.

Traders remain optimistic about the economic outlook but are still on edge about the possibility of the Federal Reserve scaling back its ultra-easy monetary policy.

A lack of major U.S. economic data also kept traders on the sidelines ahead of the release of the Labor Department's report on consumer price inflation on Thursday.

Most of the major sectors showed only modest moves on the day, although substantial strength was visible among biotechnology stocks.

Reflecting the strength in the sector, the NYSE Arca Biotechnology Index spiked by 3.6 percent to its best closing level in three months.

Biogen (BIIB) led the sector higher after the FDA granted accelerated approval to the company's Aduhelm for the treatment of Alzheimer's.

Significant strength was also visible among tobacco stocks, as reflected by the 1.4 percent gain posted by the Dow Jones U.S. Tobacco Index.

On the other hand, oil service stocks gave back ground after recent strength, dragging the Philadelphia Oil Service Index down by 2.5 percent.

Steel and chemical stocks also saw notable weakness, offsetting the strength in the aforementioned sectors.

Commodity, Currency Markets

Crude oil futures are sliding $0.47 to $68.76 a barrel after falling $0.39 to $69.23 a barrel on Monday. Meanwhile, after climbing $6.80 to $1,898.80 an ounce in the previous session, gold futures are rising $5.10 to $1,903.90 an ounce.

On the currency front, the U.S. dollar is trading at 109.27 yen compared to the 109.25 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2182 compared to yesterday’s $1.2190.

Asia

Asian stocks ended mostly lower on Tuesday as investors awaited U.S. inflation data later this week for more indications about the Fed's policy outlook.

Chinese shares fell, with the benchmark Shanghai Composite Index dropping 19.43 points, or 0.5 percent, to 3,580.11. Hong Kong's Hang Seng Index ended marginally lower at 28,781.38.

Japanese shares ended a volatile session lower, snapping two straight sessions of gains even as the government revised first quarter GDP higher.

Japan's gross domestic product shrank an annualized 3.9 percent year-on-year in the first quarter of 2021, the Cabinet Office said in a final reading amid a resurge of COVID-19 cases and slow vaccine rollouts. That exceeded expectations for a decline of 4.8 percent following the 11.7 percent surge in the three months prior.

On a quarterly basis, GDP was down 1.0 percent - again beating forecasts for a decline of 1.2 percent following the 2.8 percent increase in the previous three months.

The Nikkei 225 Index slipped 55.68 points, or 0.2 percent, to 28,963.56, while the broader Topix finished marginally lower at 1,962.65. Eisai shares soared 19.3 percent as U.S. regulators approved a new drug developed by Biogen and Eisai for Alzheimer's disease.

Australian markets swung between gains and losses before finishing slightly higher for the day as new coronavirus cases declined and a survey of business conditions reached a record high in May.

The benchmark S&P/ASX 200 Index hit a record high before ending the session up 10.70 points, or 0.2 percent, at 7,292.60. The broader All Ordinaries Index inched up 10.70 points, or 0.1 percent, to 7,542.30.

Tech stocks tracked the Nasdaq higher, with Afterpay, Xero and Appen climbing 1-3 percent. Nearmap rallied 4.6 percent and Wisetech Global shares surged 5.8 percent.

Miners BHP, Fortescue Metals Group and Rio Tinto fell about 1 percent as iron ore prices declined. Gold miner Northern Star Resources rose over 1 percent as gold held near the key level of $1,900 an ounce in Asian trading on dollar weakness and lower bond yields.

Seoul stocks slipped into the red as valuation concerns offset hopes of a swifter economic recovery. The benchmark Kospi dipped 4.29 points, or 0.1 percent, to close at 3,247.83.

Chipmaker SK Hynix shed 0.8 percent and chemical firm LG Chem gave up 0.7 percent, while pharmaceutical firm Samsung Biologics advanced 1.5 percent and automaker Hyundai Motor added 0.8 percent.

South Korea's current account surplus shrank dramatically in April, the Bank of Korea said today, coming in at $1.91 billion. That's down sharply from 7.82 billion in March. The goods account surplus increased to $4.56 billion, compared to $0.7 billion in April.

Europe

European stocks have risen on Tuesday, as investors digest mostly positive economic data and look ahead to the release of key U.S. inflation data due on Thursday for clues on when the Federal Reserve may begin to talk about tapering its asset purchases.

While the U.K.’s FTSE 100 Index has risen by 0.5 percent, the French CAC 40 Index is up by 0.3 percent and the German DAX Index is up by 0.2 percent.

Roche Holding has edged higher. The Swiss diagnostics and pharmaceutical giant said it has received CE mark for its SARS-CoV-2 Antigen Self-Test Nasal for at-home testing. The test provides results in as little as 15 minutes.

Drug maker Lonza has shown a strong move to the upside after Goldman Sachs upgraded its rating on the company’s stock to Buy.

Airbus shares have also risen in Paris. The aircraft manufacturing giant said it delivered 50 planes in May, up 11 percent from the previous month.

British American Tobacco has also advanced in London after the company upgraded its 2021 revenue guidance, citing strong pricing and volumes for combustible tobacco.

Aviva has rallied after activist investor Cevian Capital said it had built up a near 5 percent stake in the insurer.

In economic news, German industrial output dropped 1 percent on a monthly basis in April, reversing a revised 2.2 percent rise in March, data from Destatis revealed earlier in the day. Economists had forecast an increase of 0.5 percent.

German economic sentiment weakened unexpectedly in June but financial market experts' assessment of current situation improved sharply, survey data from the ZEW - Leibniz Centre for European Economic Research showed.

The ZEW Indicator of Economic Sentiment dropped to 79.8 in June from 84.4 in the previous month. The score was forecast to rise to 86.0.

Assessment of the current economic situation improved significantly, with the index rising to -9.1 from 40.1 a month ago.

Revised data from Eurostat showed GDP in the 19 countries sharing the euro contracted 0.3 percent sequentially for a 1.3 percent annual decline.

That is a modest upside revision compared with the previous estimates of -0.6 percent and -1.8 percent, respectively.

U.K. retail sales increased notably in May driven by the relaxation of restrictions related to the coronavirus pandemic, data from the British Retail Consortium showed.

Total sales grew 10 percent year-on-year in May and like-for-like sales climbed 23.7 percent.

U.S. Economic Reports

With exports climbing and imports falling, the Commerce Department released a report on Tuesday showing the U.S. trade deficit narrowed in the month of April.

The report showed the trade deficit narrowed to $68.9 billion in April from a revised $75.0 billion in March. Economists had expected the deficit to narrow to $69.0 billion from the $74.4 billion originally reported for the previous month.

The narrower trade deficit came as the value of exports jumped by 1.1 percent to $205.0 billion, while the value of imports slumped by 1.4 percent to $273.9 billion.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $58 billion worth of three-year notes.

Stocks In Focus

Shares of Stitch Fix (SFIX) are moving sharply higher in pre-market trading after the online clothing styling company reported a narrower than expected fiscal third quarter loss and provided upbeat guidance.

Contango Oil & Gas Company (MCF) is also likely to see initial strength after announcing an agreement to combine with Independence Energy, LLC in an all-stock transaction.

On the other hand, shares of Coupa Software (COUP) are seeing notable pre-market weakness even though the company reported an unexpected fiscal first quarter profit.
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