The Wednesday Market Minute
- Global stocks mixed as markets focus on regional economic performance following last night’s sell-off on Wall Street.
- Germany’s factory activity surges to the fastest pace on record last month, indicating pent-up strength that could be unleased once the pandemic has run its course.
- Chancellor Angela Merkel reverses earlier decision to impose a hard five-day lockdown over Eastern, telling lawmakers it was a ‘mistake’.
- Intel leads U.S. tech stocks higher following plans to invest $20 billion in two domestic chip factories.
- Oil prices rebound after a Taiwanese tanker blows of course in the Suez canal, creating a massive bottleneck of ships in the world’s busiest transport waterway.
- CDC data shows 45.5 million Americans have now been fully vaccinated against the coronavirus, with more than 128.2 million doses administered as of Tuesday.
- U.S. equity futures suggest a firmer open on Wall Street ahead of durable goods orders data at 8:30 am Eastern time and fourth quarter earnings from General Mills.
U.S. equity futures edged higher Wednesday as stocks looked to rebound from yesterday’s sharp sell-off amid renewed optimism for solid a post-pandemic recovery and steady Treasury bond yields.
Treasury yields, which have been the key driver of equity market direction for the past few weeks, remained muted overnight following testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen Tuesday during which the pair talked-up the potential for the domestic economy while largely dismissing concerns for sustained inflation pressures.
And while Yellen gave markets a jolt with a reference to potential tax increases, particularly for U.S. companies, a much stronger-than-expected reading of factory activity in Germany this month — the highest on record — provided more evidence of the kind of pent-up demand that is likely to be unleashed once the pandemic has run its course.
Germany’s Chancellor, Angela Merkel, also surprised markets by reversing her earlier move to impose a hard five-day lockdown over the Easter break on Europe’s biggest economy, calling the original decision “a mistake” that “was drafted with the best of intentions” but is now deemed impractical.
With benchmark 10-year bonds yields holding at 1.622% in overnight trading, even as the dollar pushed to a four-month high of 92.51 against a basket of its global peers, stocks are set for a modestly firmer open Wednesday with the Dow Jones Industrial Average looking at a 150 point opening bell gain.
Futures contracts tied to the S&P 500, meanwhile, are priced for an 18 point advance and those linked to the tech-focused Nasdaq Composite are indicating a firmer 105 point gain.
Intel (INTC) – Get Report shares were marked 5.7% higher in pre-market trading after the chipmaker said it would invest $20 billion to build two U.S.-based factories that would reduce its reliance on foreign supplies. The plans offset weaker-than-expected full year profit guidance
Another stock on the move, albeit in the opposite direction, was GameStop (GME) – Get Report, which slumped more than 13% in pre-market trading after the retailer said it may capitalize on the stock’s recent surge with a share sale, a move that would dilute the holdings of its thousands of retail share holders.
Tesla (TSLA) – Get Report shares were also active, rising 1.5% to $672.00 per share after founder and CEO Elon Musk Tweeted that the clean energy carmaker would soon offer customers the chance to purchase vehicles with bitcoin.
In other markets, oil rebounded firmly from yesterday’s 7% sell-off following news of a Taiwanese tanker that spun off course in the Suez canal, the world’s biggest transport waterway, blocking several ships and bottlenecking the key crude transport hub.
That, alongside the record-high reading for factory activity in Germany, gave Brent crude futures an early $1.57 boost to $62.37 per barrel, while WTI contracts for May jumped $1.57 to $59.33 ahead of the Energy Department’s weekly update on domestic inventories at 10:30 am Eastern time.
Overnight in Europe, stocks slipped to a two-week low following on from Wall Street’s late-hour selloff, although optimism built into the region’s PMI readings gave investors hope for a post-pandemic rebound that kept losses in check.
The Stoxx 600 benchmark slipped 0.1% lower in the opening hours of trading, while Germany’s trade-sensitive DAX index was marked 0.5% lower. Britain’s FTSE 100 was down 0.2%.
In Asia, Japan’s Nikkei 225 ended the session down 2.01% at 28,405.52 points while the region-wide MSCI ex-Japan benchmark was marked 1.13% lower heading into the final hours of trading.