Futures Pointing To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Tuesday following the pullback seen in the previous session.

U.S. stocks ended on a weak note on Monday, after languishing in the red right through the session, as investors stayed largely cautious, assessing valuations and taking some profits.

Rising coronavirus cases across the world and concerns about developments in Washington also weighed on stocks.

House Democrats are preparing to impeach Donald Trump even though the president has less than two weeks left in his term.

After the siege of the U.S. Capitol building by Trump supporters last week, Democrats are concerned about additional incitement by the president in his final days in office.

Meanwhile, on the stimulus front, President-elect Joe Biden pledged last Friday to come up with a massive economic stimulus. He said it will be “in the trillions of dollars,” and will include $2,000 direct payments to Americans and aid for small businesses.

The major averages all ended notably lower. The Dow, which plunged nearly 270 points in early trading, ended down 89.28 points or 0.3 percent at 31,008.69.

The S&P 500 slid 25.07 points or 0.7 percent to 3,799.61, while the Nasdaq settled at 13,036.43, losing 165.54 points or 1.3 percent.

The major averages scaled new peaks last week. The Dow gained about 1.6% and the S&P 500 climbed 1.8% and the Nasdaq gained 2.4% last week, and set new record closing highs in the process.

Twitter shares plunged sharply after the social media platform announced its decision to permanently suspend Trump’s account on fears he could incite further violence. FaceBook shares slid as well.

Sales of Travelers Companies tumbled more than 10%. Apple, Boeing, American Express, Coca-Cola and Procter & Gamble also lost notable ground.

Meanwhile, DuPont, Merck, Walmart, Goldman Sachs, JP Morgan Chase and General Electric moved higher.

Commodity, Currency Markets

Crude oil futures are rising $0.59 to $52.84 a barrel after inching up $0.01 to $52.25 a barrel on Monday. Meanwhile, after climbing $15.40 to $1,850.80 an ounce in the previous session, gold futures are slipping $2 to $1,848.80 an ounce.

On the currency front, the U.S. dollar is trading at 104.25 yen compared to the 104.26 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2142 compared to yesterday’s $1.2151.

Asia

Asian stocks turned in a mixed performance on Tuesday as U.S. Democrats moved quickly to impeach Donald Trump for an historic second time and investors watched for details of President-elect Joe Biden’s proposed economic stimulus plan.

Concerns over a highly infectious Covid-19 strain and fears of fresh global lockdowns also kept underlying sentiment cautious.

Chinese stocks rebounded from their worst session in three weeks after the country reported a drop in the number of new Covid-19 cases in the past 24 hours. The benchmark Shanghai Composite index surged 76.84 points, or 2.18 percent, to 3,608.34. Hong Kong’s Hang Seng index ended 1.32 percent higher at 28,276.75.

Japanese shares ended on a flat note as trading resumed after a long holiday weekend. Caution prevailed after a new coronavirus variant was detected in four people who arrived in Japan from Brazil. Also, there were reports that the government plans to expand a state of emergency to the western prefectures of Osaka, Kyoto and Hyogo.

The Nikkei average finished marginally higher at 28,164.34, recovering from early declines. The broader Topix index closed 0.16 percent higher at 1,857.94.

Chugai Pharmaceutical soared 5.9 percent after tocilizumab, an arthritis drug developed by the company and Osaka University, was found by the British government to be effective in treating patients with Covid-19.

Takeda Pharmaceutical rallied 3.3 percent, Eisai gained 3.4 percent and Shionogi & Co added 2 percent.

In economic news, a government reports showed that Japan posted a current account surplus of 1,878.4 billion yen in November. That exceeded expectations for a surplus of 1,551 billion yen and was down from 2,144.7 billion yen in October.

Seoul stocks fell for the second day running as institutional and foreign investors cashed in on recent gains amid signs the stock market is overheating. The benchmark Kospi ended down 22.50 points, or 0.71 percent, at 3,125.95.

Chipmaker SK Hynix lost 3 percent and leading chemical firm LG Chem gave up 3.6 percent. Top automaker Hyundai Motor declined 2.4 percent after gaining in the past three straight sessions on reports that it may join forces with Apple to develop autonomous electric cars.

Australian markets ended slightly lower as miners and tech stocks fell, offsetting gains among financials.

The benchmark S&P/ASX 200 index slid 18.10 points, or 0.27 percent, to 6,679.10 as the country recorded a handful of new locally acquired coronavirus cases and frictions increased between state leaders over uncoordinated decisions.

The broader All Ordinaries index ended down 20.40 points, or 0.29 percent, at 6,939.10.

Miners extended losses for the third straight session, with BHP and Rio Tinto falling around 1 percent. Tech stocks such as Afterpay and Xero fell around 2 percent. On the positive side, the big four banks rose between 0.8 percent and 1.1 percent.

Europe

European shares rebounded on Tuesday as investors braced for the earnings season and focused on the prospect of further fiscal stimulus in the U.S. under Biden Administration.

The pan European Stoxx 600 index edged up 0.2 percent to 409.25 after declining 0.7 percent on Monday.

The German DAX inched up 0.2 percent and France’s CAC 40 index was marginally higher while the U.K.’s FTSE 100 was down 0.3 percent on concerns over climbing Covid-19 cases.

Finance Minister Rishi Sunak warned that Britain’s economy would get worse before it got better.

Oil majors Total SE and BP were seeing modest gains and Royal Dutch Shell advanced 1.4 percent, tracking a rebound in crude prices.

Danish shipping company Maersk jumped nearly 4 percent on a brokerage upgrade.

Swedish online gaming company Kindred gained 5 percent after the company recorded its ‘strongest quarter ever’.

French automaker Renault rose 1.3 percent after saying it has started 2021 with a higher level of orders than in 2019.

Specialty chemicals company Sika AG added 1 percent after confirming its 2023 strategic targets.

In economic releases, U.K. retailers logged the worst year on record for sales growth due to the Covid-19 pandemic, data released by the British Retail Consortium revealed.

In 2020, total retail sales decreased 0.3 percent, the worst annual change since records began in 1995, the BRC said.

U.S. Economic Reports

Atlanta Federal Reserve President Raphael Bostic is due to speak on “Economic Recovery and Addressing Inequality” before a virtual Recording of Talks at GS Episode Via Zoom webinar at 9:30 am ET.

At 9:35 am ET, Federal Reserve Governor Lael Brainard is scheduled to speak on “Artificial Intelligence and Financial Services” before a virtual Federal Reserve Artificial Intelligence Symposium.

Dallas Federal Reserve President Robert Kaplan is due to give opening remarks and participates in panel before a virtual “Racism and the Economy: Focus on Education” event at 11 am ET.

Also at 11 am ET, Atlanta Federal Reserve President Raphael Bostic is scheduled to speak before a virtual “Racism and the Economy: Focus on Education” event.

At 12 pm ET, Cleveland Federal Reserve President Loretta Mester is due to participate via videoconference in a Distinguished Speakers Seminar, European Economics and Financial Centre in London.

The Treasury Department is scheduled to announce the results of its auction of $38 billion worth of ten-year notes at 1 pm ET.

Also at 1 pm ET, Kansas City Federal Reserve President Esther George is due to speak on the economic and monetary policy outlook before a virtual event hosted by The Central Exchange.