Futures Pointing To Roughly Flat Open On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to show a lack of direction following last week’s rally.

Traders may be reluctant to make significant moves after the upward move seen last Friday lifted the major averages to record closing highs.

Optimism about the economic outlook may help support the markets, although traders remain somewhat concerned about the outlook for monetary policy.

Further insight into the Federal Reserve’s plans may be provided later this week when the central bank releases the minutes of its latest monetary policy meeting.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of June.

With traders reacting positively to the closely watched monthly jobs report, stocks showed a strong move to the upside over the course of the trading day on Friday. The advance lifted all three major averages to new record closing highs.

The major averages reached new highs going into the close of trading. The Dow rose 152.82 points or 0.4 percent to 34,786.35, the Nasdaq advanced 116.95 points or 0.8 percent to 14,639.33 and the S&P 500 climbed 32.40 points or 0.8 percent to 4,352.34.

For the week, the Nasdaq spiked by 2 percent, the S&P 500 surged up by 1.7 percent and the Dow jumped by 1.1 percent.

The strength on Wall Street came after the Labor Department released a report showing a continued reacceleration in the pace of U.S. job growth in the month of June.

The report showed non-farm payroll employment spiked by 850,000 jobs in June after surging by an upwardly revised 583,000 jobs in May.

Economists had expected employment to jump by about 700,000 jobs compared to the addition of 559,000 jobs originally reported for the previous month.

Following the decrease in employment seen last December, the pace of job growth has bounced back to its highest level since last August.

Meanwhile, the Labor Department said the unemployment rate unexpectedly inched up to 5.9 percent in June from 5.8 percent in May. The unemployment rate was expected to edge down to 5.7 percent.

The stronger than expected job growth paints a positive picture of the gradually reopening economy but is not seen as likely to significantly alter the Federal Reserve’s timeline for tightening monetary policy.

“With further progress toward the Fed’s dual mandate likely over the summer, we anticipate a Fed tapering announcement at the Jackson Hole Symposium in August,” said Lydia Boussour, Lead US Economist at Oxford Economics

She added, “Still, while tapering would start in early 2022, rate liftoff wouldn’t be on the table until early 2023.”

A separate report from the Commerce Department showed the U.S. trade deficit widened roughly in line with estimates in the month of May.

Software stocks showed a significant move to the upside over the course of the session, driving the Dow Jones U.S. Software Index up by 1.8 percent to a record closing high.

Considerable strength also emerged among gold stocks, resulting in a 1.5 percent advance by the NYSE Arca Gold Bugs Index.

The strength in the gold sector came amid an increase by the price of the precious metal, as gold for August delivery climbed $6.50 to $1,783.30 an ounce.

Telecom and retail stocks also moved notably higher, with the NYSE Arca North American Telecom Index and the Dow Jones U.S. Retail Index rising by 1.4 percent and 1.2 percent, respectively.

Commodity, Currency Markets

Crude oil futures are climbing $0.77 to $75.93 a barrel after edging down $0.07 to $75.16 a barrel last Friday. Meanwhile, after climbing $6.50 to $1,783.30 an ounce in the previous session, gold futures are spiking $31.30 to $1,814.60 an ounce.

On the currency front, the U.S. dollar is trading at 110.65 yen compared to the 110.97 yen it fetched on Monday. Against the euro, the dollar is valued at $1.1843 compared to yesterday’s $1.1864.

Asia

Asian stocks turned in a mixed performance on Tuesday as worries grew about China’s crackdown on local tech companies and investors awaited minutes from the U.S. Federal Reserve’s latest policy meeting for more clues on tapering.

China’s Shanghai Composite Index ended down 4.06 points, or 0.1 percent, at 3,530.26, as the country’s cyberspace regulator widened its crackdown on tech platforms, targeting more U.S.-listed companies.

Hong Kong’s Hang Seng Index eased 0.3 percent to close at 28,072.86 after a survey showed the private sector in Hong Kong expanded at a slower pace in June amid dips in both output and new orders.

Japanese shares edged up slightly despite concerns over COVID-19 variants and Fed moves. The Nikkei 225 Index inched up 45.02 points, or 0.2 percent, to 28,643.21, while the broader Topix closed 0.3 percent higher at 1,954.50.

Tech-startup investor SoftBank Group gained 1 percent and air-conditioner maker Daikin Industries jumped 2.6 percent. Industrial machinery manufacturer Hitachi Zozen led the gainers, jumping 4.2 percent.

The average of household spending in Japan was up 11.6 percent year-on-year year in May, a government report showed. That beat forecasts for an increase of 10.9 percent following the 13.0 percent spike in April.

On a monthly basis, household spending was down 2.1 percent – but that beat expectations for a decline of 3.7 percent.

Australian markets gave up early gains to end lower as the country’s central bank left the cash rate at a record low 0.1 percent but said it would begin to pare its bond buying campaign delivered to the economy through the pandemic recession.

Traders also remained concerned about the rising new coronavirus infections in New South Wales and the related lockdown and restrictions.

The benchmark S&P/ASX 200 Index dropped 53.20 points, or 0.7 percent, to 7,261.80, while the broader All Ordinaries Index ended down 57.60 points, or 0.8 percent, at 7,531.40.

Beach Energy, Woodside Petroleum and Oil Search soared 2-5 percent as oil jumped to its highest level in nearly three years.

Miners ended mixed, with Fortescue Metals Group giving up 1.4 percent. Westpac slipped 0.3 percent after the bank sold its New Zealand life insurance business to Fidelity Life.

Gold miner Ramelius Resources slumped 5.4 percent after saying it will miss its upgraded full-year production guidance.

Opthea shares surged 11.1 percent after the biotech was granted Fast Track designation by the U.S. FDA for its treatment for patients with neovascular age-related macular degeneration.

Seoul stocks hit a record closing high as tech stocks gained ground ahead of the preliminary earnings from Samsung Electronics. The Kospi closed up 12 points, or 0.4 percent, at 3,305.21. Chip giants Samsung Electronics and SK Hynix advanced 1 percent and 1.6 percent, respectively.

Europe

European stocks are flat to slightly lower on Tuesday, as China tech worries weigh and the day’s economic reports proved to be a mixed bag.

German manufacturing orders dropped 3.7 percent month-on-month in May, reversing a 1.2 percent rise in April, Destatis reported. Orders were forecast to grow 1 percent.

Economic expectations declined in Germany for a second straight month but held up at historically high levels, the ZEW economic research institute said. The corresponding index decreased to 63.3 from 79.8.

Eurozone monthly retail sales rose more than expected in May after a drop in April. Eurostat said the volume of retail sales rose 4.6 percent compared with April.

A survey showed U.K. construction industry recorded its fastest growth in 24 years last month, helped by a jump in demand for new homes and commercial property.

Currently, the U.K.’s FTSE 100 Index, the French CAC 40 Index and the German DAX Index are all down by 0.2 percent.

Travel- related stocks have risen after Germany announced plans to lift travel restrictions on fully vaccinated travelers from the U.K. and Portugal.

British online supermarket Ocado Group has also moved higher. The company said its loss before tax for the 26 weeks ended 30 May 2021 narrowed to 23.6 million pounds from 40.6 million pounds in the prior year.

Meanwhile, French retailer Casino Guichard has edged down slightly after announcing it has entered into a strategic collaboration with Google Cloud and Accenture Plc. (ACN) to accelerate its digital strategy.

Speed-train maker Alstom has plunged after it forecast negative free cash flow in the first half of the financial year 2021-2022 due to the integration of newly-acquired Bombardier Transportation.

U.S. Economic Reports

The Institute for Supply Management is scheduled to release its report on service sector activity in the month of June at 10 am ET.

The ISM’s services PMI is expected to edge down to 63.5 in June from 64.0 in May, although a reading above 50 would indicate continued growth.