U.S. Stocks May Show A Lack Of Direction In Early Trading

The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to show a lack of direction after ending the previous session modestly higher.

Traders may be reluctant to make any significant moves ahead of the Federal Reserve’s annual Jackson Hole symposium later in the week.

Any comments from Fed officials at the meeting are likely to attract attention after recent indications the central bank plans to begin tapering its asset purchases this year.

Despite turning a bit sluggish at times, U.S. stocks stayed positive right through the day’s session on Tuesday amid optimism about growth and hopes that the Fed might note begin tapering its bond-buying program anytime soon.

Among the major averages, the S&P 500 and the Nasdaq, both posted new record closing highs.

The Dow ended with a gain of 30.55 points or 0.09 percent at 35,366.26, paring some gains after hitting a high of 35,445.47. The S&P 500 settled at 4,486.23, gaining 6.70 points or 0.15 percent, while the tech-laden Nasdaq ended higher by 77.15 points or 0.52 percent at 15,019.80.

Stocks gained in strength as traders shrugged off concerns about the Federal Reserve tapering its asset purchases amid continued optimism about the economic outlook.

Hopes that the FDA’s approval of thee Pfizer/BioNTech covid-19 vaccine could boost vaccination rates in the US and spur economic growth contributed as well to market’s uptick.

On the economic front, the Commerce Department released a report this morning showing a rebound in U.S. new home sales in the month of July.

The report showed new home sales increased by 1.0 percent to an annual rate of 708,000 in July after slumping by 2.6 percent to an upwardly revised rate of 701,000 in June.

Economists had expected new home sales to jump by 3.6 percent to a rate of 700,000 from the 676,000 originally reported for the previous month.

Investors await a highly-anticipated speech by Fed Chairman Jerome Powell during the virtual Jackson Hole Symposium on Friday for more clarity on the Fed’s tapering timeline.

Crude oil prices rose sharply on easing worries about outlook for energy demand, and triggered some strong buying in the energy space. Technology stocks had another good outing.

Caterpillar, Goldman Sachs, 3M, Intel and Cisco Systems posted solid gains.

Best Buy shares rallied nearly 10 percent on better-than-expected results.

Home Depot, Travelers Companies, Johnson & Johnson, Merck, Walmart and Coca-Cola drifted lower.

Commodity, Currency Markets

Crude oil futures are rising $0.51 to $68.02 a barrel after spiking $1.90 to $67.54 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,795.50, down $13 compared to the previous session’s close of $1,808.50. On Tuesday, gold rose $2.20.

On the currency front, the U.S. dollar is trading at 109.97 yen compared to the 109.65 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1730 compared to yesterday’s $1.1756.

Asia

Asian stocks traded mixed but remained broadly directionless as investors speculated whether any decisive tapering hints would emerge out of the U.S. Fed’s Jackson Hole symposium later in the week. The Fed Chief is expected to address the virtual conference in what is perceived to be a sneak peek into the Fed’s possible QE-tapering time-table. While regional benchmarks Shanghai Composite and NZX50 gained close to 0.75 percent, most other benchmarks rose only modestly. Nikkei and Hang Seng however retreated from previous close.

China’s Shanghai Composite fared comfortably to gain 0.74 percent over previous close to end trade at 3540.38. Liquidity infusion by PBoC to counter challenges to growth and reports of meetings proposed between Wall Street and Chinese Officials lifted investor sentiment.

Japan’s Nikkei 225 index stayed close to the flatline with a correction of 0.03 percent from previous close to end trading at 27,724.80. A Reuters poll which said that Japanese shares could recover to a 30-month high by the year-end, helped Nikkei hold on to most gains made early in the week, despite a challenging coronavirus situation and the impending Fed conference.

Meanwhile, the final reading of the index of leading economic indicators published by the Cabinet Office of Japan, came in at 104.1 in June, as compared to 102.6 in the previous month.

Engineering and steel business JFE Holdings was the top gainer with a rally of 5.07 percent. Within the index, only chemical manufacturer DIC Corporation and grocery retailer Seven & i Holdings declined more than 2 percent.

Korean Stock Exchange’s Kospi Index gained 8.51 points or 0.27 percent to close at 3146.81. The day’s trading range was between 3124.25 and 3161.00. Auto component maker Pusan Cast Iron company rallied 15.28 percent. Apparel and accessories maker F&F Holdings’ share price was eroded more than 10 percent in the day’s trade.

The Hang Seng Index of the Hong Kong Stock Exchange shed 66.92 points or 0.26 percent from previous close to finish trading at 25,661.00. The day’s high was at 25,949.00 and low was at 25,524.12.

The S&P ASX200 gained 29 points or 0.39 percent to close at 7,531.90, around 1.32 percent below its 52-week high of 7632.80.

Data released during the day indicated that construction output increased by 0.8 percent in June quarter versus 2.4 percent rise in previous quarter and expectation of a 2.5 percent rise.

Logistics software provider Wisetech Global surged more than 28 percent following upbeat results and outperformance of its guidance. Artificial intelligence specialist Appen Ltd rallied 8.7 percent. Financial services company Hub24 that recently released results gained 8.5 percent.

Industrial distributor Reece shed 10.8 percent. Broadcasting company Nine Entertainment corrected by 9.7 percent and construction and agricultural equipment business Seven Group Holdings lost 7.6 percent after results publication.

The NZX50 of the New Zealand Stock Exchange gained 101.62 points or 0.78 percent to close at 13,173.48. At closing levels, the index was 3.45 percent below the 52-week high of 13643.78.

Meanwhile, data released earlier in the day showed that imports jumped 34.7 percent and exports climbed 15.2 percent to result in the trade balance swing to deficit of NZD402 million for the month of July.

Agri-business company Scales Corporation gained 9.17 percent following publication of half yearly results. Retirement villages developer Summerset group that also recently released results rallied 8.70 percent. Skycity Entertainment group closely followed with gains of 6.13 percent.

Entertainment company Skynetwork Television, electricity generation company Trustpower and seafood company Sanfort, all declined little more than 2 percent.

Europe

European stocks are slightly higher around noon on Wednesday with investors largely making cautious moves as they look for directional clues.

The focus now remains on the upcoming Jackson Hole Symposium, where the Federal Reserve’s policymakers are expected to detail their plans about tapering the central bank’s bond-buying program.

Disappointing reading of the Ifo Business Climate indicator for Germany appears to be weighing a bit.

Among the major markets, the U.K. and France are modestly higher, while Germany is weak. The U.K.’s FTSE 100 is up 0.2% and France’s CAC 40 is gaining 0.18%, while Germany’s DAX is lower by 0.18%. The pan European Stoxx 600 is edging up 0.1%.

In the UK market, Ocado Group and Weir Group shares are gaining 3.2% and 3%, respectively. IAG is rising 2.3%, while Entain, Standard Chartered, Flutter Entertainment and ITV are up 1.5 to 2%. Rolls-Royce Holdings, JD Sports Fashion, AstraZeneca and Peshing Square Holdings are also notably higher.

Severn Trent, United Utilities, Unilever, Antofagasta, Rio Tinto, National Grid Plc and Fresnillo are weak.

In France, Publicis Groupe shares are gaining 2.7%. Pernod Ricard shares are notably higher after the company said it expects to book an additional profit before tax of $163 million in its 2021 earnings report, after a favourable tax ruling.

Airbus Group, Technip, Societe Generale, Unibail Rodamco and Air France-KLM are up 1 to 1.6%. Faurecia is declining more than 2%.

In the German market, Puma is climbing 1.7%, Adidas is up 1.3% and Infineon Technologies is gaining nearly 1%.

Continental, Fresenius, Beiersdorf, BMW and Munich RE are down 0.5 to 1%.

Survey results from Ifo Institute showed German business confidence weakened for the second straight month in August mainly due to significantly less optimism in companies’ expectations.

The business climate index fell to 99.4 in August from 100.7 in July. The score was expected to ease moderately to 100.4.

The current situation indicator advanced to 101.4 from 100.4 in the previous month. The expected level was 100.8.

On the other hand, the expectations index declined to 97.5 in August from 101.0 a month ago and also remained below economists’ forecast of 100.0.

U.S. Economic Reports

The Commerce Department released a report on Wednesday showing a modest decrease in new orders for U.S. manufactured durable goods in the month of July.

The report said durable goods orders edged down by 0.1 percent in July following a 0.8 percent increase in June. Economists had expected orders to decrease by 0.3 percent.

Excluding a steep drop in orders for transportation equipment, durable goods orders climbed by 0.7 percent in July after rising by 0.6 percent in June. Ex-transportation orders were expected to increase by 0.5 percent.

At 10:30 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended August 20th.

Crude oil inventories are expected to decreases by 2.7 million barrels after falling by 3.2 million barrels in the previous week.

The Treasury Department is due to announce the results of this month’s auction of $61 billion worth of five-year notes at 1 pm ET.

Also at 1 pm ET, San Francisco Federal Reserve President Mary Daly is scheduled to participate in a virtual fireside chat to discuss insights about the current barriers to access to financial services before the Aspen Institute.