Market Analysis

The major U.S. index futures are currently pointing to a lower open on Wednesday, with stocks likely to give back ground following the strong upward move seen in the previous session.

After opening on a positive note Tuesday morning, U.S. stocks stayed firm right through the day's session, and closed with strong gains thanks to sustained buying at several counters.

Strong retail sales and industrial production data, some upbeat earnings updates and Fed Chair Jerome Powell's positive comments about the strength of the economy helped lift sentiment.

Powell said he is confident that the central bank can raise rates and deal with inflation without sending the economy into recession, although he noted that it will be a challenging task.

"The economy is strong. We think it is well positioned to withstand less accommodative monetary policy," Powell said.

Data released by the Commerce Department showed retail sales climbed by 0.9 percent in April after jumping by an upwardly revised 1.4 percent in March. Economists had expected retail sales to rise by 0.7 percent compared to the 0.5 percent increase originally reported for the previous month.

Excluding a rebound in sales by motor vehicle and parts dealers, retail sales rose by 0.6 percent in April after surging by 2.1 percent in March. Ex-auto sales were expected to edge up by 0.3 percent.

Industrial Production in the United States increased 6.4 percent year-on-year in April of 2022, following a downwardly revised 5.4 percent rise in AMarch.

The major averages all ended with impressive gains. The Dow ended with a gain of 431.17 points or 1.34 percent at 32,654.59. The S&P 500 settled higher by 80.84 points or 2.02 percent at 4,088.85, while the Nasdaq climbed 321.73 points or 2.76 percent to settle at 11,984.52, just a few points off the day's high.

Financials stocks had a pretty good outing. JP Morgan Chase, Bank of America, Wells Fargo, American Express, Visa and Goldman Sachs gained 3 to 4 percent.

Boeing climbed more than 6 percent. Walt Disney, Cisco Systems, Intel, Nike, Caterpillar, Apple, Honeywell International, IBM and Microsoft moved up 2 to 3.5 percent.

Shares of The Home Depot. Inc gained about 1.7 percent after the company said its bottom line totaled $4.23 billion, or $4.09 per share in the first-quarter, compared with $4.15 billion, or $3.86 per share in the corresponding quarter last year.

Walmart shares plunged more than 11 percent after first-quarter results fell short of expectations. The supermarket giant also cut its guidance for second-quarter and the full-year.

Commodity, Currency Markets

Crude oil futures are surging $2.58 to $114.98 a barrel after slumping $1.80 to $112.40 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,808, down $10.90 compared to the previous session’s close of $1,818.90. On Tuesday, gold rose $4.90.

On the currency front, the U.S. dollar is trading at 129.08 yen compared to the 129.38 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0517 compared to yesterday’s $1.0550.

Asia

Asian stocks finished mixed amidst gains in Nikkei, Kospi, ASX 200, NZX50, Hang Seng and losses in Shanghai Composite. Japanese shares gained as the economy contracted less than expected. Higher commodity prices lifted Australian mining stocks. New Zealand Index too gained tracking overnight gains in Wall Street, triggered by the strong retail sales numbers. Chinese stock market sentiment was muted amidst an anxious wait to strong policy support from Beijing and hoping for an end to the Covid lockdowns.

China's Shanghai Composite Index dropped 7 points or 0.25 percent to finish at 3,085.98. The day's trading ranged between 3,071.30 and 3,105.84. The Shenzhen Component Index lost 0.24 percent to close at 11,203.26.

The Japanese benchmark Nikkei 225 gained 251 points or 0.94 percent to end trading at 26,911.20.

IHI Corp led the gainers charts with an uptick of close to 5.5 percent. Japan Steel Works, Fujitsu, NTT Data Corp and Kobe Steel, all gained more than 4 percent.

Kikkoman Corp lost more than 3 percent. Cyber Agent too declined close to 3 percent. Hitachi Zosen Corp dropped more than 2 percent. Matsui Securities Co and Taiheiyo Cement Corp lost less than 2 percent.

The Hang Seng Index of the Hong Kong Stock Exchange gained 42 points or 0.20 percent from the previous close to finish trading at 20,644.28. The day's trading range was between 20,389.61 and 20.711.93.

Korean Stock Exchange's Kospi Index added 5 points or 0.21 percent to close trading at 2,625.98. The day's trading range was between 2,618.00 and 2644.13.

Australia's S&P/ASX200 closed trading at 7,182.70 after gaining 70 points or 0.99 percent. The day's trading was between 7,112.50 and 7,199.00.

Diversified metals and mining business South32 was the top gainer with a 5.4 percent surge. Champion Iron gained 5.3 percent following announcement of plans to acquire a Quebec-based Iron Ore Pelletizing Facility and signing of an MOU with an international steelmaker. Flight Centre Travel Group, Corporate Travel Management, and Paladin Energy, all gained a little less than 5 percent.

Healthcare equipment business Polynovo was the top loser, shedding more than 5 percent. Materials businesses Sims, Boral and Incitec Pivot, as well as retailer Eagers Automotive lost more than 3 percent in the day's trading.

The NZX50 of the New Zealand Stock Exchange added 120.4 points or 1.08 percent to close at 11,258.28. Trading ranged between 11,137.88 and 11,269.72.

Utilities business Meridian Energy was the top gainer with a 4.7 percent rally. Rubber and polymer business Skellerup Holdings too gained more than 4 percent. Cancer diagnostics company Pacific Edge moved up 3.75 percent. Real Estate Investment Trust Argosy Property, and retirement villages business Oceania Healthcare, both increased more than 3 percent.

Software business EROAD was the biggest loser with a decline of close to 7 percent. Software company Serko dropped more than 4 percent while another software business Vista Group International lost 1.79 percent. Communication services provider Spark New Zealand and Auckland International Airport, both shed less than a percent.

Europe

European stock markets plunged into negative territory as the anxiety around red-hot inflation and the likely aggressive inflation combat spooked investor sentiment. Positive earnings updates however helped limit the losses.

U.K.'s FTSE 100 is 0.31 percent below the previous closing level of 7518.35. It is currently trading at 7495.19. In the 100-scrip index, only 40 scrips are in positive territory.

France's CAC 40 index's current level of 6,411.19 is 0.30 percent below the previous close of 6,430.19. Of the 40 scrips in the index, 13 are trading above Tuesday's levels.

Germany's DAX is currently trading at 14151.06, after shedding 0.25 percent from Tuesday's close.

Switzerland's Stock Market Index has also declined from the previous close and is currently trading at 11,669.39 after dropping 0.52 percent overnight.

The pan-European Stoxx 600 also shed 0.44 percent from previous close and is currently trading at 437.05.

The EURUSD pair is currently hovering near 1.0509 whereas the GBPUSD pair is near 1.2406.

On Tuesday, European markets had recorded strong gains, in the backdrop of low unemployment numbers from France and U.K. Germany's DAX led the rally with a 1.59 percent uptick. France's CAC 40 added 1.30 percent; the pan European Stoxx 600 added 1.22 percent; U.K.'s FTSE 100 rallied 0.72 percent; while Switzerland's SMI moved up 0.50 percent.

U.S. Economic Reports

A report released by the Commerce Department on Wednesday showed a modest decrease in new residential construction in the month of April.

The Commerce Department said housing starts edged down by 0.2 percent to an annual rate of 1.724 million from a revised rate of 1.728 million in March.

The slight drop in housing starts came as single-family housing starts plunged by 7.3 percent to an annual rate of 1.100 million.

Meanwhile, the report showed building permits, an indicator of future housing demand, tumbled by 3.2 percent to an annual rate of 1.819 million from a revised rate of 1.879 million in March.

At 10:30 am ET, the Energy Information Administration is due to release its report on oil inventories in the week ended May 13th.

Crude oil inventories are expected to increase by 1.4 million barrels after jumping by 8.5 million barrels in the previous week.

The Treasury Department is due to announce the results of this month’s auction of $17 billion worth of twenty-year bonds at 1 pm ET.

At 4 pm ET, Philadelphia Federal Reserve President Patrick Harker is scheduled to speak on the economic outlook before a virtual Mid-Size Bank Coalition of America CEO Talk.