U.S. Stocks Likely To Extend Lackluster Performance

The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to extend the lackluster performance seen in the previous session.

U.S. stocks closed nearly flat on Tuesday after turning in a lackluster performance as investors refrained from making significant moves, choosing to wait for the consumer inflation data, due later in the week.

Among the major averages, the Dow ended weak, settling at 34,599.82 with a loss of 30.42 points or 0.09 percent. The S&P 500, which hit a four-week high in early trades, closed at 4,227.26, up 0.74 points or 0.02%, while the Nasdaq closed higher by 43.19 points or 0.31 percent at 13,924.91.

Despite rising optimism about strong economic growth amid the acceleration in vaccine rollout and gradual reopening of businesses in several parts of the U.S., investors were reluctant to build up positions due to concerns about rising inflation and possibility of the Federal Reserve starting discussions on tapering its asset buying program.

Data released by the Commerce Department Tuesday morning showed U.S. trade deficit narrowed in the month of April, falling to $68.9 billion from a revised $75 billion in the previous month. Economists had expected the deficit to narrow to $69.0 billion from the $74.4 billion originally reported for the previous month.

Exports were up 1% at $205.0 billion, while the value of imports slumped by 1.4% to $273.9 billion in April.

A report from the National Federation of Independent Business said the NFIB Small Business Optimism Index in the United States stood at 99.6 in May 2021, slightly down from the previous month’s five-month high and well below pre-pandemic levels. It was the first decline in morale this year.

Meanwhile, job openings soared to a new record high in April. According to the data released, U.S. saw 9.3 million vacancies in April, well above the 8.3 million seen in March.

Data on U.S. consumer price inflation for the month of May is due out on Thursday. The data is likely to provide some cues on policy tapering from the Federal Reserve. The next meeting of the Federal Open Market Committee is scheduled to take place on June 15 and 16.

American Express, Honeywell International, United Health, Chevron, IBM, Apple and Amgen posted notable gains.

3M, Procter & Gamble, Goldman Sachs, Johnson & Johnson, DuPont, Coca-Cola, Walmart, Microsoft and Merck closed weak.

Tesla shares pared early gains and ended on a negative note.

Commodity, Currency Markets

Crude oil futures are rising $0.35 to $70.40 a barrel after climbing $0.82 to $70.05 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,892.60, down $1.80 compared to the previous session’s close of $1,894.40. On Tuesday, gold fell $4.40.

On the currency front, the U.S. dollar is trading at 109.39 yen compared to the 109.50 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.2192 compared to yesterday’s $1.2173.

Asia

Asian stocks fell broadly on Wednesday, as investors digested mixed Chinese inflation data and looked ahead to the release of U.S. inflation data that could influence how soon the Federal Reserve pares its stimulus program.

Chinese shares closed higher after the release of inflation data. The benchmark Shanghai Composite index edged up 11.29 points, or 0.32 percent, to 3,591.40 while Hong Kong’s Hang Seng index ended down 38.75 points, or 0.13 percent, at 28,742.63.

Consumer prices in China were up 1.3 percent year-on-year in May, the National Bureau of Statistics said. That fell short of expectations for an increase of 1.6 percent and was up from 0.9 percent in April.

On a monthly basis, inflation eased 0.2 percent versus expectations for a decline of 0.1 percent.

The bureau also said that producer prices jumped an annual 9.0 percent, exceeding expectations for an increase of 8.5 percent and up from 6.8 percent a month earlier. That was the fastest pace of increase in over 12 years.

Japanese shares ended lower as investors waited for U.S. inflation data for further clues regarding monetary policy. The Nikkei average fell 102.76 points, or 0.35 percent, to 28,860.80, while the broader Topix index closed 0.28 percent lower at 1,957.14.

A retreat in long-term U.S. Treasury yields weighed on banks, with Sumitomo Mitsui Financial and Mitsubishi UFJ Financial losing 1.1 percent and 1.6 percent,
respectively. Eisai surged 16.3 percent to extend gains from the previous session after its Alzheimer’s drug received a nod from U.S. regulators.

Australian markets gave up early gains to end slightly lower for the day after data showed consumer confidence slipped for a second straight month in June due to concerns around the two-week lockdown in Melbourne.

The benchmark S&P/ASX 200 hit a record high in intra-day trading before ending the session down 22.40 points, or 0.31 percent, at 7,270.20. The broader All Ordinaries index slipped 20.30 points, or 0.27 percent, to 7,522.

Miners BHP, Fortescue Metals Group and Rio Tinto rose between half a percent and 1 percent. Mining services provider Perenti Global lost 2.2 percent after it won a US$496m contract from Sandfire Resources.

Oil stocks Woodside Petroleum, Santos and Beach Energy fell between half a percent and 1 percent. Banks also ended broadly lower, with NAB and Westpac pacing the declines.

Brickworks soared 11.3 percent after the building materials firm said it expects record-high earnings from its property assets.

Seoul stocks extended losses from the previous session as central bank data showed the country’s economy grew 1.7 percent in the first quarter from three months earlier, 0.1 percentage point higher than earlier expected.

The benchmark Kospi dropped 31.65 points, or 0.97 percent, to 3,216.18. S K Hynix tumbled 3.9 percent while Samsung Electronics and Naver fell around 1 percent.

Europe

European stocks edged lower on Wednesday, as investors looked to upcoming U.S. inflation data and a European Central Bank (ECB) policy meeting for directional cues.

Amid ample chatter about rising inflation, the release of key U.S. consumer inflation data on Thursday may provide some cues on policy tapering.

The European Central Bank is likely to maintain a higher pace of asset purchases for another quarter when it reviews monetary policy on Thursday.

The pan European Stoxx 600 dropped 0.2 percent to 453.01, after having hit a record high of 455.66 in the previous session.

The German DAX fell 0.4 percent after data showed the country’s exports rose less than expected in April.

France’s CAC 40 index slipped 0.1 percent and the U.K.’s FTSE 100 was down half a percent.

A sharp rise in Chinese factory prices weighed on the mining sector, with Anglo American, BHP, Rio Tinto, Antofagasta and Glencore falling between 1.4 percent and 2.5 percent.

Spanish retail giant Inditex lost 1.8 percent despite reporting a turnaround to profit for the first quarter.

Banco Bilbao Vizcaya Argentaria S.A. declined 1.7 percent. The financial services group has reached an agreement with unions to lay off 2,935 employees in Spain.

French Food group Danone gave up 1.6 percent after RBC downgraded the stock to “underperform”.

Volkswagen AG edged down slightly as the German automaker announced a contribution of $620 million or about 500 million euros in a financing round of its Swedish battery partner Northvolt AB with a total volume of $2.75 billion.

Airline shares rallied after the U.S. Centers for Disease Control and Prevention (CDC) eased travel recommendations for more than 110 countries and territories.

Lufthansa rose over 3 percent, Air France KLM climbed 3.2 percent, EasyJet rallied 2.4 percent, Ryanair Holdings added 2.2 percent and British Airways-owner IAG jumped 3 percent.

U.S. Economic Reports

At 10 am ET, the Commerce Department is scheduled to release its report on wholesale inventories in the month of April. Wholesale inventories are expected to increase by 0.8 percent.

The Energy Information Administration is due to release its report on oil inventories in the week ended June 5th at 10:30 am ET.

Crude oil inventories are expected to drop by 2.0 million barrels after falling by 5.1 million barrels in the previous week.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $38 billion worth of ten-year notes.