Futures Pointing To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to regain ground following the downturn seen over the course of the previous session.

Traders may look to pick up stocks at somewhat reduced levels, although lingering concerns about inflation and the Federal Reserve scaling back stimulus may keep buying interest relatively subdued.

A pullback by the price of crude oil may contribute to initial strength on Wall Street, as the recent spike in prices has added to worries about corporate margins.

Earnings news is also likely to be on traders’ minds, with financial giant JPMorgan Chase (JPM) due to report its third quarter results before the start of trading on Wednesday.

Bank of America (BAC), Citigroup (C), Morgan Stanley (MS), Wells Fargo (WFC), and Goldman Sachs (GS) are also due to report their quarterly results in the coming days.

After moving to the upside early in the session, stocks moved mostly lower over the course of the trading day on Monday. With the downturn on the day, the major averages added to the modest losses posted during last Friday’s session.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow slid 250.19 points or 0.7 percent to 34,496.06, the Nasdaq fell 93.34 points or 0.6 percent to 14,486.20 and the S&P 500 dropped 30.15 points or 0.7 percent to 4,361.19.

Lingering concerns about the Federal Reserve scaling back its asset purchases weighed on Wall Street, as last Friday’s disappointing job report is not seen as likely to dissuade the central bank from tapering.

Worries about the outlook for inflation also generated selling pressure amid a sharp increase by the price of crude oil. Crude for November delivery jumped $1.17 to $80.52 a barrel after reaching its highest intraday level since late 2014.

Trading activity was somewhat subdued, however, as some traders remained away from their desks for Columbus Day, also known as Indigenous Peoples’ Day.

While the stock markets were open on the day, banks, government offices and the bond markets were closed for the holiday.

Brokerage stocks showed a notable move to the downside on the day, dragging the NYSE Arca Broker/Dealer Index down by 1.2 percent.

Weakness was also visible among interest-rate sensitive utilities stocks, as reflected by the 1.1 percent drop by the Dow Jones Utility Average.

Telecom, airline and banking stocks also moved lower on the day, while steel stocks bucked the downward trend.

Commodity, Currency Markets

Crude oil futures are dipping $0.27 to $80.25 a barrel after jumping $1.17 to $80.52 a barrel on Monday. Meanwhile, after edging down $1.70 to $1,755.70 an ounce in the previous session, gold futures are slipping $1.70 to $1,754 an ounce.

On the currency front, the U.S. dollar is trading at 113.74 yen compared to the 113.31 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.535 compared to yesterday’s $1.1552.

Asia

Asian stocks retreated on Tuesday as inflation worries persisted and Evergrande’s debt troubles sent shockwaves across the region.

There were also concerns that disappointing U.S. jobs data would not suffice to slow the U.S. Federal Reserve’s timeline for tapering its stimulus.

China’s Shanghai Composite Index slumped 44.77 points, or 1.3 percent, to 3,546.94 after some bondholders said they did not receive coupon payments totaling $148 million on Evergrande’s April 2022, April 2023 and April 2024 notes due by 4:00 GMT Tuesday, putting investors at risk of large losses.

With small developers Modern Land and Sinic Holdings also scrambling to delay deadlines, analysts have warned of more defaults ahead if the liquidity problem does not improve markedly.

Hong Kong shares fell sharply after three days of healthy gains. The benchmark Hang Seng plunged 362.50 points, or 1.4 percent, to 24,962.59, dragged down by tech giants.

Japanese shares also snapped a three-day winning streak as tech stocks fell amid fears over higher U.S. interest rates. The Nikkei 225 Index ended down 267.59 points, or 0.9 percent, at 28,230.61, while the broader Topix closed 0.7 percent lower at 1,982.68.

Start-up investor SoftBank Group fell 2.4 percent and Uniqlo operator Fast Retailing gave up 3.3 percent, while Screen Holdings, Fanuc and Advantest lost 1-3 percent. Yaskawa Electric slumped 4.3 percent to extend losses despite an upward revision to its profit outlook on Friday.

Seoul stocks ended lower for a second straight session as foreign and institutional investors offloaded shares amid concerns over inflation sparked by surging prices of oil and other energy resources.

The benchmark Kospi tumbled 39.92 points, or 1.4 percent, to 2,916.38. Market bellwether Samsung Electronics plummeted 3.5 percent and No. 2 chipmaker SK Hynix gave up 2.7 percent.

Australian markets extended declines for the second day running after Westpac Banking Corp. flagged a $956.54 million hit to its second-half profit from one-off charges.

Shares of the country’s second-largest bank dropped 1.7 percent, while the benchmark S&P/ASX 200 index ended down 19.10 points, or 0.3 percent, at 7,280.70. The broader All Ordinaries Index slipped 25.50 points, or 0.3 percent, to finish at 7,575.60.

Casino firms extended losses from the previous session, with Star Entertainment Group tumbling 2.7 percent on fears of tighter regulatory scrutiny in the industry. Biotech CSL advanced 1.8 percent after reaffirming its full-year guidance.

Europe

European stocks have fallen on Tuesday, as investors worry about issues including inflation, pressures on quarterly earnings and China Evergrande Group’s debt crisis.

Traders also awaited cues from the U.S. corporate earnings season, with analysts expecting companies to report slowing growth due to supply-chain snags and rising prices.

While the French CAC 40 Index has fallen by 0.6 percent, the U.K.’s FTSE 100 Index is down by 0.4 percent and the German DAX Index is down by 0.3 percent.

Givaudan has moved lower despite the fragrance and flavour maker reporting decent sales growth in the first nine months of the year.

easyJet has also fallen. The airline said during fourth quarter it flew 17.3 million seats, operating 58 percent of fiscal 2019 capacity with a stronger performance on intra-European and U.K. domestic routes.

Societe Generale SA is also moving lower. The French bank said that it would cut 3,700 jobs between 2023 and 2025, as part of a plan announced last year to merge its domestic retail operations.

On the other hand, DSV has moved to the upside after the transport company raised its earnings expectations for the year.

Lonza Group has also advanced. The Swiss chemicals and technology company updated its 2024 Group and divisional mid-term guidance driven by strong momentum across businesses.

De La Rue shares have also rallied. Issuing a trading update for the six months ended September 25, 2021, the passport and banknote printer said the outlook for the financial year 2021/22 continues to be in line with the Board’s expectations.

EKF Diagnostics Holdings has also jumped. The maker of central laboratory products said it has completed the acquisition of ADL Health, a PCR-focused testing laboratory.

Gerresheimer AG shares have also surged. The German company reported higher earnings for the third quarter, reflecting strong revenue growth.

In economic news, German wholesale prices grew 13.2 percent annually in September following August’s 12.3 percent increase, Destatis reported.

The last time there was a bigger increase from the same month of the previous year was in June 1974, when wholesale prices rose 13.3 percent in the wake of the first oil crisis.

U.K. retail sales grew only 0.6 percent on a yearly basis in September after rising 3 percent in August, data published by the British Retail Consortium and KPMG revealed. At the same time, like-for-like sales fell 0.6 percent annually.

The German ZEW Economic Sentiment index arrived at 22.3 in October, down from 26.5 in September. The Eurozone ZEW Economic Sentiment for the month fell to 21.0 for the current month as compared to 31.1 last month.

U.S. Economic Reports

The Labor Department is scheduled to release the results of its Job Openings and Labor Turnover Survey for August at 10 am ET. Job openings are expected to inch up to 11.0 million in August from 10.9 million in July.

At 11:15 am ET, Federal Reserve Vice Chair Richard Clarida is due to speak on the U.S. economic outlook and monetary policy before the virtual Institute of International Finance Annual Meeting.

The Treasury Department is scheduled to announce the results of this month’s auction of $58 billion worth of three-year notes at 11:30 am ET.

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

Stocks In Focus

Shares of Signet Jewelers (SIG) are moving notably higher in pre-market trading after the jewelry retailer announced an agreement to acquire rival Diamonds Direct for $490 million and raised its third quarter and full-year guidance.

Drugmaker GlaxoSmithKline (GSK) may also move to the upside after a report from Bloomberg said the company’s consumer unit is drawing interest from private equity firms in what could lead to the biggest buyout of all time.

Shares of MGM Resorts (MGM) are also likely to see initial strength after Credit Suisse upgraded its rating on the resort operator’s stock to Outperform from Neutral.

On the other hand, shares of CureVac (CVAC) may come under pressure after the biopharmaceutical company said it would halt development of its first-generation COVID-19 vaccine candidate and focus on developing second-generation mRNA vaccine candidates in collaboration with GSK.