Market Analysis

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to see initial strength following the substantial volatility seen in recent sessions.

Traders may look to pick up stocks at reduced levels, extending the recovery seen late in the trading session last Friday.

The S&P 500 climbed well off its worst levels to end the day roughly flat after tumbling more than 20 percent from January's record closing high, which is seen as signaling a bear market.

Buying interest may also be generated in reaction to news the financial hub of Shanghai has lifted some of its COVID-19 restrictions and U.S. President Joe Biden said he was weighing cutting tariffs on Chinese goods.

“I am considering it. We did not impose any of those tariffs. They were imposed by the last administration and they're under consideration,” Biden said.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of the minutes of the latest Federal Reserve meeting as well as reports on new home sales, durable goods orders and personal income and spending.

Stocks experienced another extremely volatile session during trading on Friday, with the major averages once again showing wild swings as the day progressed.

The major averages pulled back sharply after failing to sustain an early upward move but staged a significant recovery attempt going into the close.

After plunging more than 600 points at its worst levels, the Dow edged up 8.77 points or less than tenth of a percent to 31,261.90.

The S&P 500 also ended the day roughly flat, inching up 0.57 points or less than a tenth of a percent to 3,901.36, while the Nasdaq dipped 33.88 points or 0.3 percent to 11,354.62.

Primarily reflecting the sell-off on Wednesday, the major averages all posted steep losses for the week. The Nasdaq dove by 3.8 percent, while the S&P 500 and the Dow tumbled by 3 percent and 2.9 percent, respectively.

The extended volatility on Wall Street came as traders continued to debate when the markets will reach a bottom following recent weakness.

At its low for the session, the S&P 500 was down more than 20 percent from January's record closing high, which is seen as signaling a bear market.

Light trading activity may also have contributed to the volatility, with a lack of major U.S. economic data keeping some traders on the sidelines following the release of a slew of data earlier in the week.

Traders may also have been looking ahead to next week's reports on new home sales, durable goods orders, and personal income and spending as well as the minutes of the latest Federal Reserve meeting.

Computer hardware stocks climbed well off their worst levels but still ended the day notably lower, resulting in a 2.9 percent slump by the NYSE Arca Computer Hardware Index.

Significant weakness also remained visible among airline stocks, as reflected by the 1.4 percent drop by the NYSE Arca Airline Index.

On the other hand, pharmaceutical stocks moved sharply higher on the day, driving the NYSE Arca Pharmaceutical Index up by 2 percent.

Healthcare stocks also turned in a strong performance, with the Dow Jones U.S. Health Care Index climbing by 1.2 percent.

Commodity, Currency Markets

Crude oil futures are climbing $0.99 to $111.27 a barrel after rising $0.39 to $110.28 a barrel last Friday. Meanwhile, after inching up $0.90 to $1,842.10 an ounce in the previous session, gold futures are advancing $18.60 to $1,860.10 an ounce.

On the currency front, the U.S. dollar is trading at 127.71 yen versus the 127.88 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0654 compared to last Friday’s $1.0564.

Asia

Asian stocks ended Monday's session on a mixed note, as parts of Beijing have again come under a lockdown amid signs the pandemic outbreak is spreading in more and more Chinese cities.

Authorities have imposed a lockdown in the Haidian district along with the Chaoyang, Fengtai, Shunyi, and Fangshan districts, China's Global Times reported, citing a statement by the city government's spokesperson.

Regional gains, if any, were limited amid lingering concerns that inflation and rising interest rates would hamper the global economic outlook.

Market participants await the latest FOMC minutes and U.S. personal consumption expenditure price, a key gauge of inflation used by the Fed this week for more clues on the pace of future rate hikes.

China's Shanghai Composite iIdex recovered from an early slide to end little changed, while Hong Kong's Hang Seng Index fell 1.2 percent to 20,470.06. Tech stocks succumbed to selling pressure, with Bilibili and Alibaba ending down 4.1 percent and 3.4 percent, respectively.

Beijing extended work-from-home guidance for many of its 22 million residents after reporting 99 new infections for the previous day, the largest daily tally so far during a month-old outbreak.

Elsewhere, Shanghai deployed more testing and curbs to hold on to its hard-won “zero COVID” status after two months of lockdowns.

Japan's Nikkei 225 Index jumped 1 percent to close above the psychological 27,000 level, tracking gains in U.S. stock futures. The broader Topix ended up 0.9 percent at 1,894.57.

Financials led the surge, with insurer Tokio Marine Holdings spiking 7.6 percent after its fiscal year net profit more than doubled.

Seoul stocks extended gains for the second day running, with the Kospi rising 0.3 percent to 2,647.38.

Vaccine maker SK Bioscience soared 4.7 percent after announcing it has delivered the first shipment of its chickenpox vaccine injection solution, Sky Varicella, as part of a $31.27 million order from an international public health agency.

Australian markets gave up early gains to end on a flat note as investors closely watched daily COVID-19 numbers in China.

Higher iron ore futures helped lift miners, while banks declined on expectations that Labor Party's election win over the weekend will put more pressure on the Reserve Bank of Australia to continue to normalize policy and move towards neutral sooner rather than later.

Europe

European stocks are broadly higher on Monday, as the financial hub of Shanghai lifted some of its COVID-19 restrictions and U.S. President Joe Biden said he was weighing cutting tariffs on Chinese goods.

"I am considering it. We did not impose any of those tariffs. They were imposed by the last administration and they're under consideration," Biden said.

Merger & acquisition news and improved German business sentiment data also offered some support.

Germany's business climate index rose to 93.0 points in May from a revised figure of 91.9 points in April, according to data from the Ifo Institute released earlier in the day.

While the French CAC 40 Index has edged up by 0.2 percent, the German DAX Index is up by 0.9 percent and the U.K.’s FTSE 100 Index is up by 1.2 percent.

Anglo American, Glencore, BP Plc and Shell have all risen in London as Shanghai announced plans to ease lockdowns.

Moonpig has jumped after the personalized greeting cards provider agreed to acquire gifting experience firm Buyagift for £124 million.

Self-storage provider Big Yellow Group has rallied after conditionally sold its industrial warehouse scheme in Harrow, England, for 61 million pounds.

Retailer Kingfisher has also shown a notable move to the upside after reiterating its profit guidance for full-year 22/23.

Britvic Plc, a soft drinks maker, has also advanced after it entered into an agreement with Citigroup Global Markets Limited, to buy back up to 26.73 million Britvic shares for around 75 million pounds.

Swiss building materials company Holcim Group has also risen after it acquired Louisiana-based Cajun Ready-Mix Concrete.

Deutsche EuroShop AG shares have soared after a consortium of bidders offered 1.4 billion euros ($1.49 billion) to acquire the shopping-center real-estate firm.

Siemens AG has edged higher after its energy arm Siemens Energy made a cash tender offer to acquire all outstanding shares in Siemens Gamesa Renewable Energy.

U.S. Economic Reports

Atlanta Federal Reserve President Raphael Bostic is scheduled to participate in a conversation on the economic outlook before an Atlanta Rotary event at 12 pm ET.

Stocks In Focus

Shares of VMWare (VMW) are moving sharply higher in pre-market trading following reports the cloud computing company is in advanced talks to be acquired by chipmaker Broadcom (AVGO).

Communications equipment and software company Motorola Solutions (MSI) is also likely to see initial strength after Morgan Stanley upgraded its rating on the company’s stock to Overweight from Equal-Weight.

On the other hand, shares of HP Inc. (HPQ) may move to the downside after Citi downgraded its rating on the computer and printer maker to Neutral from Buy.