U.S. Stocks May Extend Yesterday’s Lackluster Performance

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

U.S. stocks closed on a mixed note on Monday as investors largely stayed cautious and selective with their moves.

Concerns about the spread of the delta variant Covid-19 in Europea and Asia, and the resultant fresh restrictions on travel in several countries weighed on sentiment.

Also, with some crucial economic data, including reports on private sector employment, non-farm payrolls employment, manufacturing activity, consumer confidence, and factory orders, due later in the week, traders were a bit wary of creating fresh long positions.

Still, it turned out to be a fairly good session of technology stocks, and the Nasdaq composite index went on to hit a new record high, even as the Dow slid, weighed down by a sell-off at the Boeing counter.

The Dow ended the session with a loss of 150.57 points or 0.44 percent at 34,283.27, nearly 100 points off the day’s low of 34,186.13. The S&P 500 ended up by 9.91 points or 0.23 percent at 4,290.61, a new closing high, while the Nasdaq settled at a record closing high of 14,500.51 with a gain of 140.12 points or 0.98 percent, after scaling a new peak at 14,505.19.

Tech stock Facebook climbed by about 4 percent after a federal court dismissed the Federal Trade Commission’s antitrust case against the social media company.

U.S. District Judge James Boasberg in Washington dismissed the complaints filed last year by FTC and state attorneys general led by New York’s Letitia James. The complaint was seeking to break Facebook’s monopoly in social networking, which could have resulted in divestiture of Instagram and WhatsApp.

In the complaint, FTC and the states had claimed that Facebook violated antitrust laws by buying photo-sharing app Instagram and messaging service WhatsApp to eliminate any competition and continue its monopoly.

However, in the filing, the court states that the FTC did not prove Facebook controls over 60 percent of the market -a monopoly.

Shares of Nvidia rose by about 5 percent on reports the company has got the nod for the acquisition of ARM for a consideration of $40 billion.

Intel, Microsoft and Apple closed with strong gains.

Boeing shares drifted down by about 3 percent on reports the aircraft maker is unlikely to receive certification for its 777X long-range aircraft untill the middle or late 2023.

Bank stocks were weak, weighed down by falling bond yields. Energy stocks dropped due to lower crude oil prices amid concerns about energy demand and on cautioun ahead the OPEC+ meet, scheduled to take place on Thursday.

Commodity, Currency Markets

Crude oil futures are rising $0.33 to $73.24 a barrel after tumbling $1.14 to $72.91 a barrel on Monday. Meanwhile, after rising $2.90 to $1,780.70 an ounce in the previous session, gold futures are sliding $15.50 to $1,765.20 an ounce.

On the currency front, the U.S. dollar is trading at 11.70 yen compared to the 110.63 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1884 compared to yesterday’s $1.1925.

Asia

Asian stocks ended broadly lower on Tuesday, as outbreaks of the highly contagious Covid-19 variant Delta and reports of new travel curbs in some parts of the world raised concerns about a hindrance to global economic recovery.

Chinese stocks fell sharply as reports of more contagious Delta COVID-19 strain spread in Asia and elsewhere stoked fears of further lockdowns.

The benchmark Shanghai Composite index fell 33.19 points, or 0.92 percent, to 3,573.18 while Hong Kong’s Hang Seng index ended down 274.20 points, or 0.94 percent, at 28,994.10.

Japanese shares fell as pandemic concerns weighed on cyclicals and offset gains in the technology sector. The Nikkei average dropped 235.41 points, or 0.81 percent, to 28,812.61 amid news on another impending State of Emergency in Tokyo and other areas due to signs of resurgence in COVID-19 infections. The broader Topix index settled 0.82 percent lower at 1,949.48.

Department store chain operator Takashimaya slumped 4.7 percent and rival Isetan Mitsukoshi declined 3.2 percent. Steelmaker Nippon Steel tumbled 3.8 percent and JFE Holdings lost 3 percent.

Oil exploration firm Inpex plunged 4.7 percent and Japan Petroleum lost 3.5 percent as oil prices dropped for a second day on worries about slower fuel demand growth.

In economic news, the unemployment rate in Japan came in at 3.0 percent in May – a tad above expectations for 2.9 percent and up from 2.8 percent in April.

Australian markets recouped most losses to end on a flat note as Brisbane became the country’s fourth regional capital city to restrict movement outside of homes except for essential reasons.

Five of Australia’s eight states and territories have been hit by outbreaks of the Delta variant, with around 80 percent of the population under some form of restrictions.

Both the S&P/ASX 200 index and the broader All Ordinaries index finished marginally lower at 7,301.20 and 7,565.50, respectively.

Energy stocks such as Woodside Petroleum, Origin Energy an Oil Search fell 1-2 percent as oil prices hit one-week low on concerns over a spike in COVID-19 cases in Asia and Europe.

Mining heavyweights BHP and Rio Tinto dropped 0.7 percent and 0.8 percent, respectively while banks ended flat to slightly higher.

Technology stocks rose broadly, with Afterpay and Appen rising about 1 percent, taking their cues from a strong session in the tech-heavy Nasdaq Composite index on Wall Street overnight.

Seoul stocks ended lower for the second day running as new COVID-19 outbreaks in Australia and South East Asia weakened investors’ appetite for riskier assets.

The benchmark Kospi slipped 15.21 points, or 0.46 percent, to 3,286.68, taking a cue from new travel bans against the new COVID-19 variants in many parts of the world. Samsung Electronics, SK Hynix and POSCO lost 1-2 percent while LG Chem gained 1.1 percent.

Europe

European stocks edged higher on Tuesday, as cyclicals gained ground on optimism around a steady economic recovery.

Underlying sentiment was also underpinned after the European Commission said that its economic sentiment indicator increased sharply in June to hit a 21-year high, driven mainly by a strong increase in confidence in the services sector.

Another survey showed French consumer sentiment strengthened to a 15-month high in June.

The U.S. dollar rose against a basket of currencies as hawkish remarks from the U.S. Federal Reserve policy makers supported prospects of a tightening of monetary policy sooner rather later.

Richmond Fed President Thomas Barkin said on Monday that the central bank has made “substantial further progress” toward its inflation goal so as to begin the withdrawal of stimulus.

The pan European Stoxx 600 inched up 0.2 percent to 455.94 after declining 0.6 percent on Monday. The German DAX climbed 0.6 percent, France’s CAC 40 index edged up 0.3 percent and the U.K.’s FTSE 100 was up 0.2 percent.

Banks rose broadly, with Deutsche Bank, BNP Paribas, Credit Agricole, Societe Generale and Barclays all climbing about 1 percent on economic optimism.

French drug maker Sanofi was little changed after announcing it would invest about 400 million euros annually to accelerate research and development of next generation vaccines by launching mRNA Center of Excellence.

Rexel SA, a distributor of electrical supplies, jumped 5 percent after raising its sales outlook for full-year 2021.

Food and beverages company GEA Group AG gained 0.8 percent. The company has agreed to sell its refrigeration contracting operations in Spain and Italy to Clauger.

Housebuilder Persimmon advanced 1.3 percent in London, Taylor Wimpey added 0.6 percent and Barratt Developments rose half a percent after a survey showed U.K. house prices grew 13.4 percent on a yearly basis in June, the biggest outturn since November, 2004.

Oil rig construction company Lamprell slumped 22 percent. The company has warned of liquidity constraints and funding needs after posting a narrower loss for the full year 2020.

Energy services provider Hunting Plc declined 1.5 percent after issuing a pre-close trading update ahead of its half-year results.

U.S. Economic Reports

Standard & Poor’s is scheduled to release its report on home prices in major metropolitan areas in the month of April at 9 am ET.

Also at 9 am ET, New York Federal Reserve Bank President John Williams is due to participate in a panel before a virtual Bank for International Settlements Andrew Crockett Memorial Lecture event.

The Conference Board is scheduled to release its report on consumer confidence in the month of June at 10 am ET. The consumer confidence index is expected to rise to 119.0 in June from 117.2 in May.