Traders May Make Another Attempt At Bargain Hunting

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to move back to the upside following a recent downward move.

Traders may once again make an attempt at bargain hunting, although the buying interest seen early in the two previous sessions faded over the course of the day.

A lack of major U.S. economic could keep traders on the sidelines ahead of the release of reports on consumer prices, industrial production and retail sales in the coming days.

The looming Federal Reserve meeting may also keep traders reluctant to make significant moves, with the central bank potentially providing an update on the outlook for its asset purchase program.

The Fed’s two-day monetary policy meeting is scheduled for next Tuesday and Wednesday, but recent signs of slowing economic momentum could lead the central bank to hold off on discussing tapering.

Stocks once again failed to sustain an early upward move and came under pressure over the course of the trading day on Friday. With the downturn on the day, the Dow and the S&P 500 closed lower for the fifth consecutive session.

The major averages accelerated to the downside going into the close, ending the day firmly negative. The Dow fell 271.66 points or 0.8 percent to 34,607.72, its lowest closing level in well over a month. The Nasdaq slid 132.76 points or 0.9 percent to 15,115.49 and the S&P 500 dropped 34.70 points or 0.8 percent to 4,458.58.

For the holiday-shortened week, the Dow tumbled by 2.2 percent, while the S&P 500 and the Nasdaq slumped by 1.7 percent and 1.6 percent, respectively.

The initial strength on Wall Street came as traders looked to pick up stocks at somewhat reduced levels following the recent downward trend.

Buying interest waned shortly after the start of trading, however, as traders continued to express concerns about the economic impact of the delta variant.

Traders may also have been wary of buying stocks ahead of the Federal Reserve’s next monetary policy meeting later this month.

In U.S. economic news, the Labor Department released a report showing producer prices increased by slightly more than expected in the month of August.

The Labor Department said its producer price index for final demand climbed by 0.7 percent in August after jumping by 1.0 percent for two straight months. Economists had expected producer prices to increase by 0.6 percent.

Excluding prices for food, energy and trade services, core producer prices rose by 0.3 percent in August following a 0.9 percent advance in July. Core prices were expected to rise by 0.4 percent.

Tobacco stocks moved sharply lower on the day, dragging the NYSE Arca Tobacco Index down by 3.8 percent. The index continued to give back ground after reaching a nearly three-year closing high on Tuesday.

Substantial weakness also emerged among airline stocks, as reflected by the 3.3 percent slump by the NYSE Arca Airline Index. The nosedive came after the index soared by 2.6 percent on Thursday.

Utilities stocks also came under pressure over the course of the session, resulting in a 1.6 percent drop by the Dow Jones Utilities Average.

Gold, commercial real estate and brokerage stocks also saw notable weakness, while some strength remained visible among semiconductor stocks.

Commodity, Currency Markets

Crude oil futures are climbing $0.85 to $70.57 barrel after jumping $1.58 to $69.72 a barrel last Friday. Meanwhile, after sliding $7.90 to $1,792.10 an ounce in the previous session, gold futures are slipping $3.70 to $1,788.40 an ounce.

On the currency front, the U.S. dollar is trading at 110.05 yen versus the 109.94 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1781 compared to last Friday’s $1.1814.

Asia

Asian stocks ended broadly higher Monday despite news of fresh regulatory crackdowns on Chinese firms and lingering concerns over the impact of COVID-19.

Chinese shares advanced despite reports that the Biden administration was weighing a new probe into Chinese subsidies. The benchmark Shanghai Composite Index rose 12.26 points, or 0.3 percent, to 3,715.37.

Meanwhile, Hong Kong’s Hang Seng Index fell 392.10 points, or 1.50 percent, to 25,813.81, with tech stocks tumbling after the Financial Times reported that Beijing wants to break up Ant Group’s Alipay and create a separate app for its loan business.

Chinese electric vehicle stocks also fell after the country’s industry minister said there are “too many” EV makers in China and the government will encourage consolidation.

Japanese shares reversed early losses to end slightly higher for the day amid rising bets that Taro Kono will become the country’s next prime minister.

The Nikkei 225 Index edged up 65.53 points, or 0.2 percent, to 30,447.37, marking an almost seven-month closing high. The broader Topix closed 0.3 percent higher at 2,097.71, reaching a three-decade high.

Shinsei Bank jumped 13 percent to extend gains for the second day running after an unsolicited bid by SBI Holdings. Tech stocks Advantest and Tokyo Electron gained 2 percent and 1.5 percent, respectively. Automakers Honda, Nissan and Toyota fell over 1 percent.

Australian shares fluctuated before ending higher amid news the country will expand its COVID-19 vaccination drive. The benchmark S&P/ASX 200 Index rose 18.60 points, or 0.3 percent, to 7,425.20, while the broader All Ordinaries Index ended up 19.90 points, or 0.3 percent, at 7,726.10.

Energy stocks such Woodside Petroleum and Santos rose around 2 percent as oil prices climbed to a one-week high on U.S. supply concerns. Sydney Airport surged 4.6 percent after getting a sweetened takeover offer.

Miners ended broadly higher, with OZ Minerals rallying 4.2 percent and Lynas Rare Earths surging 5.4 percent after Nickel prices jumped on Friday to their highest in more than seven years.

Seoul stocks ended a choppy session marginally higher amid uncertainty about U.S. inflation, China’s tech crackdown and worries about the spread of Delta variant of the coronavirus. Traders also reacted to reports suggesting that Pyongyang successfully test-fired a new type of long-range cruise missile over the weekend.

Tech heavyweights Samsung Electronics and SK Hynix both rose over 1 percent, while steelmaker POSCO jumped 4.2 percent.

Mobile messenger operator Kakao and its subsidiaries came under selling pressure amid a political move to regulate unfair business practices in platform businesses. Kakao Corp. tumbled 4.2 percent and KakaoBank slumped 6.2 percent.

Europe

European stocks have advanced on Monday as hopes for a strong eurozone economic recovery outweighed concerns over fresh regulatory crackdowns on Chinese firms.

While the German DAX Index has jumped by 1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are up by 0.8 percent and 0.7 percent, respectively.

German online pet supplies’ retailer Zooplus AG has moved sharply higher. Zorro Bidco, a holding company controlled by funds advised by Hellman & Friedman, raised its takeover offer for the company to 3.29 billion euros ($3.89 billion) from an initial offer of 3 billion euros.

Patrizia AG, a partner for global real assets, has also soared. The company has entered into a share purchase agreement for the transformational acquisition of Whitehelm, an independently owned infrastructure manager.

Re-insurer Hannover Re AG has also risen after saying it anticipates a continuing trend towards higher prices and improved conditions in property and casualty reinsurance for the various rounds of renewals in 2022.

Engineering services firm Babcock has also rallied after it agreed with Equitix Investment Management Limited for the sale of 15.4 percent shareholding in AirTanker Holdings Limited for 126 million pounds.

SThree Plc, a pure-play specialist staffing business, has also surged. The company expects fiscal 2021 profit performance to be significantly ahead of consensus.

On the other hand, United Internet has tumbled. The company said that its Management Board resolved to prematurely terminate a share buyback program as of the end of September 13, 2021.

Valneva shares have also plunged. The U.K. government is cancelling a vaccine supply contract with the French biotech company, alleging a breach of obligations that Valneva denies.

Associated British Foods has also moved to the downside after fourth-quarter sales at its Primark fashion business came in below estimates.

In economic news, German wholesale prices grew at the fastest pace since 1974 in August amid sharp increases in raw material and intermediate product prices, Destatis reported.

Wholesale prices increased 12.3 percent on a yearly basis following an 11.3 percent jump in July. This was the strongest growth since October 1974, when prices were up 13.2 percent in the wake of the first oil crisis.

U.S. Economic Reports

No major U.S. economic data is scheduled to be released today.

Stocks In Focus

Shares of Dell Technologies (DELL) are seeing pre-market strength after Goldman Sachs added the computer maker’s stock to its “Conviction Buy” list.

Resort operator MGM Resorts (MGM) may also move to the upside after Bernstein upgraded its rating on the company’s stock to Outperform from Market Perform.

On the other hand, shares of Virgin Galactic (SPCE) may see initial weakness after postponing its next test flight with the Italian Air Force to mid-October due to a potential manufacturing defect.