The Tuesday Market Minute
- Global stocks mixed as Europe braces for further coronavirus lockdowns and U.S. lawmakers grapple with spending and Supreme Court nomination challenges heading into the November elections.
- U.K. Prime Minister Boris Johnson is set to unveil new business and work-from-home restrictions Tuesday as infections in the world’s fifth-largest economy continue to surge.
- The U.S. dollar trades at a six-week high against a basket of its global peers in a cautious overnights session that following last night’s barnstorming tech-lead rally on Wall Street.
- China’s Global Times reports little change of Beijing agreeing to the Trump-brokered sale of TikTok, while questions over the ownership stake continue to swirl.
- Oil gains as Tropical Storm Beta eases in the Gulf of Mexico region, with U.S. crude back over $40 a barrel.
- U.S. equity futures suggest a mixed open on Wall Street ahead of Fed Chairman Jerome Powell’s House testimony at 10:00 am Eastern time.
U.S. equity futures steadied Tuesday, following a storming rally late Monday evening that lifted stocks from one of the worst sessions in weeks, even as markets continue to track infection spreads and lockdown orders in Europe and political and election risk at home.
Last night’s tech-lead rally erased half of a near 1,000 point decline for the Dow Jones Industrial Average yesterday, setting up Wall Street for a modestly positive open ahead of Federal Reserve Chairman Jerome Powell’s first of three sessions of testimony before lawmakers in Washington.
Powell, fresh off his unveiling of a new inflation strategy that is likely to keep interest rates at zero percent for the next three years, will sit before the House Financial Services Committee late today, alongside Treasury Secretary Steve Mnuchin, in a session lead by California Democrat Maxine Waters.
The testimony is likely to be one of several points of interest for traders and investors this week as lawmakers grapple with the partisan prospect of a Supreme Court Justice nomination while attempting to broker a spending deal that will keep the government funded beyond the end of the month.
Little room from those negotiations, however, is likely to be found for another round of consumer-focused stimulus, leaving investors to wonder if the Fed is able to absorb any shocks to the world’s largest economy, which is already seeing weakness in spending and employment following modest summer rebounds, in the coming months.
Futures contracts suggest a 30 point opening bell decline for the Dow, however, and the S&P 500 snapping a four day losing streak with a modest 4.5 point opening bell gain.
The tech-focused Nasdaq, meanwhile, is priced for a firmer 65 point advance on the back of a solid turnaround for Apple (AAPL) – Get Report, and gains for many of its big-name tech rivals even as questions continue to swirl around the Trump-brokered takeover of TikTok by Oracle (ORCL) – Get Report and Walmart (WMT) – Get Report.
Tesla Inc. (TSLA) – Get Report shares were a notable early-market mover, falling 4% ahead of the clean energy carmaker’s ‘Battery Day’ event that founder and CEO Elon Musk has cautioned likely won’t make any meaningful impact for the group’s production until 2022.
Oracle shares also drifted lower, falling 1.3% as China’s state-controlled Global Times newspaper said the TikTok sale likely won’t be approved by Beijing.
Tuesday’s session still looks to be a cautious one, however, as evidence by gains for the U.S. dollar, which climbed to a six week high of 93.80 in overnight trading as dealers reacted to news of fresh social restrictions in the United Kingdom as well as an urge from Prime Minister Boris Johnson for people to continue to work from home as coronavirus infections in Europe’s second-largest economy continue to surge.
European stocks, however, were able to book modest early gains, following a Monday session where markets fell the most in three weeks, thanks to weaker domestic currencies and a rebound in tech and energy shares.
The Stoxx 600 benchmark, the region’s broadest measure of share prices, was marked 0.67% higher in Frankfurt while Britain’s FTSE 100 bumped 0.36% higher in London to 5,825.47 points.
Global oil prices managed to rally, as well, even in the face of the stronger U.S. dollar, as concerns over the impact of tropical storm Beta on refineries and drilling installations in the Gulf of Mexico abated.
WTI contracts for October delivery, the U.S. benchmark, traded 56 cents higher from their Friday close in New York at $40.10 per barrel in early European dealing while Brent contracts for November, the new global benchmark, were seen 962 cents higher at $42.06 per barrel.
Overnight in Asia, Japan’s Nikkei 224 remained closed for a second consecutive session, this time to observe the autumn equinox, leaving the region-wide MSCI ex-Japan to head towards the end of the session with a 1% decline, lead to the downside by weakness in Shanghai and South Korea.