Futures Pointing To Roughly Flat Open On Wall Street

The major U.S. index futures are currently pointing to a roughly flat opening on Monday following the strong upward move seen last week.

Traders may be reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged, but traders will be paying close attention to any changes to the accompanying statement.

Some traders are hoping the Fed will address the recent spike in bond yields, which has led to considerable volatility in Wall Street in recent sessions.

U.S. economic reports on retail sales, industrial production, and housing starts may also attract attention in the coming days.

A report released by the Federal Reserve Bank of New York this morning showed an acceleration in the pace of growth in New York manufacturing activity in the month of March.

Extending its winning streak to six consecutive sessions, the Dow showed a strong move to the upside during trading on Friday, The blue chip index jumped 293.05 points or 0.9 percent to a new record closing high of 32,778.64.

The S&P 500 also inched up 4.00 points or 0.1 percent to a new record closing high of 3,943.34, while the tech-heavy Nasdaq climbed well off its worst levels of the day but still closed down 78.81 points or 0.6 percent at 13,319.86.

Despite the mixed performance on the day, the major averages all moved sharply higher for the week. The Dow soared by 4.1 percent, the Nasdaq surged up by 3.1 percent and the S&P 500 jumped by 2.6 percent.

The continued advance by the Dow came as traders expressed optimism about the economy reopening after President Joe Biden directed states to make all adults eligible for a coronavirus vaccine by May 1st.

The vaccine news combined with the new $1.9 trillion stimulus package led to hopes for a return to normalcy after a year of the coronavirus pandemic.

Adding to the positive sentiment, the University of Michigan released a report showing U.S. consumer sentiment improved by much more than expected in the month of March.

The University of Michigan said its consumer sentiment index jumped to 83.0 in March after dipping to 76.8 in February. Economists had expected the index to inch up to 78.5.

With the much bigger than expected increase, the consumer sentiment index reached its highest level since hitting 89.1 in March of 2020.

Meanwhile, the economic optimism also led to a spike in treasury yields, with the ten-year yield surging above 1.6 percent to reach its highest levels in a year.

The jump in yields weighed on technology stocks, resulting in the pullback by the tech-heavy Nasdaq, which had skyrocketed by 2.5 percent on Thursday.

Airline stocks moved sharply higher over the course of the session, with the NYSE Arca Airline Index soaring by 2.2 percent to its best closing level since last February.

The jump in bond yields also contributed to considerable strength among banking stocks, driving the KBW Bank Index up by 1.7 percent to a record closing high.

Commercial real estate, utilities and telecom stocks also moved notably higher, while weakness among semiconductor and software stocks weighed on the tech-heavy Nasdaq.

Commodity, Currency Markets

Crude oil futures are sliding $0.53 to $65.08 a barrel after falling $0.41 to $65.61 a barrel last Friday. Meanwhile, after slipping $2.80 to $1,719.80 an ounce in the previous session, gold futures are climbing $8.80 to $1,728.60 an ounce.

On the currency front, the U.S. dollar is trading at 109.19 yen versus the 109.03 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1924 compared to last Friday’s $1.1953.

Asia

Asian stocks ended mixed on Monday as investors awaited the outcome of this week’s Federal Reserve meeting for any comments about rising yields and the U.S. economic outlook.

Chinese shares fell sharply as an ongoing crackdown on technology companies and tightening financial conditions sapped investor confidence. Traders also reacted to a slew of data painting a mixed picture of the world’s second-largest economy.

The benchmark Shanghai Composite Index slumped 33.13 points, or 1 percent, to 3,419.95. Hong Kong’s Hang Seng Index edged up 0.3 percent to 28,833.76 as Xiaomi Corp. shares surged after a temporary halt to a U.S. ban.

Industrial production in China jumped 35.1 percent year-on-year in the period including January and February, the National Bureau of Statistics said, beating forecasts for an increase of 30 percent following the 7.3 percent gain in the previous month.

The bureau also said that fixed-asset investment was up an annual 35 percent – shy of expectations for 40 percent. Retail sales spiked an annual 33.8 percent, exceeding expectations for 32 percent after rising 4.6 percent in the previous month. The jobless rate came in at 5.5 percent, up from 5.2 percent previously.

Japanese shares edged up slightly after data showed the value of core machine orders in Japan slipped a seasonally adjusted 4.5 percent sequentially in January – exceeding expectations for a decline of 5.5 percent following the upwardly revised 5.3 percent increase in December. On a yearly basis, core machine orders climbed 1.5 percent.

The Nikkei 225 Index inched up 49.14 points, or 0.2 percent, to 29,766.97, while the broader Topix closed 0.9 percent higher at 1,968.73. Cyclical stocks rose on hopes of a faster economic recovery in the United States, while tech stocks succumbed to selling pressure.

Ship builder Mitsui E&S Holdings surged 7.8 percent, while shipping firms Kawasaki Kisen and Nippon Yusen climbed 7 percent and 4.7 percent, respectively.

Aviation Company ANA Holdings gained 4.4 percent and Japan Airlines added 3.8 percent. E-commerce firm Rakuten soared 24 percent after it announced a capital tie-up with postal giant Japan Post Holdings. Shares of the latter advanced 2.5 percent.

Automakers Toyota and Honda rose 2-3 percent, while banks Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group added around 4 percent each.

On the flip side, heavyweight SoftBank Group declined 2.5 percent. Tokyo Electron fell 1.6 percent and Advantest gave up 1.3 percent in the tech space.

Australian markets swung between gains and losses before finishing marginally higher. Qantas Airways surged 3.8 percent on news that Singapore and Australia are discussing the possibility of setting up an air travel bubble.

The big four banks ended flat to slightly higher ahead of RBA policy meeting minutes due Tuesday, with governor Philip Lowe saying the central bank would continue to support the economic recovery from the coronavirus pandemic.

Mining heavyweight Rio Tinto fell 2.2 percent and Fortescue Metals Group lost 4.1 percent on lower iron ore prices, while gold miners Evolution Mining and Newcrest gained 2.5 percent and 1.4 percent, respectively. Technology stocks underperformed, with Afterpay tumbling 4.5 percent.

Seoul stocks ended a choppy session lower as benchmark 10-year Treasury yields hit 1.6 percent once again, reviving concerns of earlier-than-expected post-pandemic inflation. The benchmark Kospi slipped 8.68 points, or 0.3 percent, to 3,045.71.

Tech stocks paced the decliners, with Samsung Electronics losing 1.2 percent and SK Hynix giving up 2.5 percent. Among the prominent gainers, LG Chem rallied 2.3 percent and Kia Motors jumped 3.6 percent.

Europe

European stocks have risen on Monday as buoyant expectations for a global economic recovery have helped investors shrug off fears about rising inflation.

U.S. Treasury yields have fallen slightly today as investors adopt a wait-and-see approach ahead of this week’s Federal Reserve meeting.

The pan-European Stoxx 600 Index has risen by 0.2 percent, while the U.K.’s FTSE 100 Index and the French CAC 40 Index are both up by 0.1 percent. Meanwhile, the German DAX Index has edged down by 0.1 percent.

Automakers and travel-related stocks are on the rise across the region amid optimism about the economic recovery.

French food company Danone has also rallied on news that Emmanuel Faber would step down as chairman and chief executive due to growing pressure from shareholders.

Roche Holding has also risen. The Swiss pharmaceutical firm said it is offering $24.05 a share for GenMark Diagnostics, a U.S.-based maker of molecular diagnostic tests.

Swedish clothing retailer H&M has also edged higher. The company said that sales in the period 1-13 March this year increased 10 percent in local currencies compared with the same period in 2020.

Finnish telecom gear maker Nokia has also gained after saying it will expand the Self-Organizing Networks (SON) technology across 5G networks operated by Orange. Shares of the latter advanced 1.5 percent.

Flutter Entertainment shares have surged. The owner of the Paddy Power and Betfair brands said it is considering an initial public offering of its U.S.-focused FanDuel sports betting and fantasy sports business.

On the other hand, Provident Financial shares have slumped. The credit lender said the Financial Conduct Authority has opened an investigation into conduct issues at its home credit business over the past year.

U.S. Economic Reports

A report released by the Federal Reserve Bank of New York on Monday showed an acceleration in the pace of growth in New York manufacturing activity in the month of March.

The New York Fed said its general business conditions index climbed to 17.4 in March from 12.1 in February, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to rise to 14.5

Looking ahead, the New York Fed said firms remained optimistic that conditions would improve over the next six months, anticipating significant increases in employment.

Stocks In Focus

Shares of GenMark Diagnostics (GNMK) are soaring in pre-market trading after the maker of molecular diagnostic tests agreed to be acquired by Swiss drugmaker Roche for $1.8 billion in cash.

NXP Semiconductors (NXPI), Penn National Gaming (PENN), Generac Holdings (GNRC) and Caesars Entertainment (CZR) are also likely to see initial strength on news the stocks are set to join the S&P 500.

On the other hand, shares of Eli Lilly (LLY) are seeing significant pre-market weakness after the drug giant revealed data from a phase 2 trial of its experimental treatment for Alzheimer’s.