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Beyond the Numbers

Lower futures, rising U.S.-China tensions pointing to weak start on Wall Street
8/2/2022 8:52 AM

Weak futures amid rising tensions between the U.S. and China due to U.S. House Speaker Nancy Pelosi's visit to Taiwan point to a weak opening for stocks on Wall Street Tuesday morning.

The Dow futures were down 181 points or 0.55 percent at 32,586.00 a little while ago. The S&P futures were down 27.25 points or 0.66 percent at 4,093.25, while the Nasdaq futures were lower by 117.25 points or 0.9 percent at 12,845.25.

It is feared that a trip by Pelosi to Taiwan would raise tensions between the two economic superpowers. Chinese foreign ministry spokesman Zhao Lijian said that Pelosi's visit would lead to "very serious developments and consequences". The White House has warned China against turning her visit into a crisis.

On the economic front, data on motor vehicles sales for the month of July, and the JOLTs job openings for June are due for release today.

In stock specific news, Dupont will be in focus after reporting second-quarter adjusted profit per share of 88 cents on sales of $3.3 billion, beating expectations for a 75 cents per share profit from revenue of $3.25 billion.

Caterpillar Inc. reported second-quarter earnings of $1.67 billion, or $3.13 per share compared to $1.41 billion, or $2.56 per share a year ago. Revenue for the quarter rose 10.6 percent to $14.25 billion from $12.89 billion last year.

Uber Technologies reported a second-quarter net loss attributable to the company of $2.6 billion, compared to net profit of $1.14 billion in the same period, last year.

After recording their best month in the Year in July, U.S. stocks turned in a sluggish performance on Monday, the first trading session of August, and ended slightly weak.

The mood in the market was quite cautious due to worries about a possible recession after data showed weakening factory activity in Asia and Europe. Data showing manufacturing activity in the U.S. rose at the weakest rate in nearly two years hurt as well.

Fairly encouraging corporate earnings updates helped limit market's downside.

The major averages all ended in negative territory despite seeing a brief spell in positive territory. The Dow ended with a loss of 46.73 points or 0.14 percent at 32,798.40, after moving between 32,640.79 and 32,972.03.

The S&P 500 ended lower by 11.66 points or 0.28 percent at 4,118.63, while the Nasdaq settled at 12,368.98, down 21.71 points or 0.18 percent from the previous close.

Commodity, Currency Markets

Crude oil futures are up $0.47 or 0.5 percent at $94.36 a barrel. Gold futures are gaining $16.00 or 0.9 percent at $1,803.70 an ounce.

On the currency front, the U.S. dollar is trading at $1.0217 against the Euro, firming from $1.0263. Against the Japanese currency, the dollar is trading weak, 130.77 yen, compared with 131.61 yen on Tuesday.

Asia

Asian stocks fell on Tuesday as worrying manufacturing data from across the globe raised concerns over a potential recession. Chinese, Hong Kong and Taiwanese stocks led losses ahead of a possible trip by U.S. House Speaker Nancy Pelosi to Taipei as part of her Asian tour.

Shanghai's benchmark Shanghai Composite Index fell 2.26 percent, while Hong Kong's Hang Seng dropped 2.36 percent. The Taiwan Weighted benchmark index ended 1.56 percent down.

Japanese shares ended sharply lower as a firmer yen against the dollar weighed on exporters. The Nikkei average lost 1.42 percent to close at 27,594.73, while the broader Topix index ended 1.77 percent lower at 1,925.49.

South Korea's KOSPI fell 0.52 percent, while Australian market ended little changed as the country's central bank raised the cash rate for the fourth time in as many months to curb inflation.

The New Zealand market bucked the trend and edged up marginally.

Europe

European stocks are broadly lower with investors weighing the risks of worsening relationship between the U.S. and China as they expect that a trip by Nancy Pelosi to Taiwan would raise tensions between the two economic superpowers.

Chinese foreign ministry spokesman Zhao Lijian said that Pelosi's visit would lead to "very serious developments and consequences". The White House has warned China against turning her visit into a crisis.

Additionally, the United States accused Russia of using Ukraine's biggest nuclear power plant as a "nuclear shield" by stationing troops there, preventing Ukrainian forces from returning fire and risking a terrible nuclear accident.

U.S. Economic Reports

The Labor Department's Job Openings and Labor Turnover Survey or JOLTS report which tracks monthly changes in job openings and offers rates on hiring and quits is scheduled at 10.00 am ET. The consensus is 11.0 million, while in the prior month the job openings were 11.25 million.

Chicago Federal Reserve Bank President Charles Evans will speak to the media on the U.S. economy and monetary policy at 9.00 am ET.

Investors will be looking ahead to the crucial non-farm payroll data for the month of July, due later this week, as the report is likely to provide some clues about the central bank's future policy stance.
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