Futures Pointing To Lower Open On Wall Street

The major U.S. index futures are currently pointing to a lower open on Wednesday, with stocks likely to move to the downside following the mixed performance seen in the previous session.

The downward momentum on Wall Street comes as traders keep an eye on debt ceiling developments, as a vote on raising the limit it due to held in the House later in the day.

U.S. stocks ended mixed on Tuesday as the mood turned cautious around mid afternoon with investors awaiting the passage of the debt ceiling deal.

Stocks, particularly from the technology section, started off on a firm note, although the broad market, however, was somewhat sluggish.

The initial strength came following news President Joe Biden and House Speaker Kevin McCarthy, R-Calif., reached an agreement in principle to raise the debt ceiling and avoid a potentially disastrous default by the U.S. government.

A source familiar with the negotiations told CNN the agreement in principle will raise the debt ceiling for two years and keep non-defense spending roughly flat for fiscal 2024 and increase it by 1 percent in fiscal year.

Stocks turned easy amid concerns the agreement is likely to face opposition from some Republicans who were seeking bigger spending cuts, potentially prolonging the process of passing the bill. Also, traders looked ahead to the monthly jobs report on Friday amid concerns about further interest rate hikes.

The major averages ended mixed. The Dow, which was down in negative territory save for a few minutes at the start, ended with a modest loss of 50.56 points or 0.15 percent at 33,042.78.

The S&P 500 settled at 4,205.52, little changed from the previous close, while the Nasdaq ended up 41.74 points or 0.32 percent at 13,017.43.

In economic news, consumer confidence in the U.S. saw a modest decrease from an upwardly revised level in the month of May, according to a report released by the Conference Board.

The Conference Board said its consumer confidence index edged down to 102.3 in May from an upwardly revised 103.7 in April.

Economists had expected the consumer confidence index to slip to 100.0 from the 101.3 originally reported for the previous month.

Energy stocks declined amid a steep drop in oil prices. Gold stocks fell as well.

Merck, P&G and Visa ended lower by 1.4 to 1.7 percent. Visa, 3M, Caterpillar, Coca-Cola, Microsoft and Chevron also closed weak.

Intel climbed more than 3 percent. Salesforce.com surged 1.6 percent. Apple, Cisco Systems, Amgen, Boeing, Travelers Companies, JP Morgan, Honeywell International and American Express closed with moderate gains.

Commodity, Currency Markets

Crude oil futures are tumbling $2.33 to $67.13 a barrel after plummeting $3.21 to $69.46 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,960.60, up $2.60 compared to the previous session’s close of $1,958. On Tuesday, gold surged climbed $13.70.

On the currency front, the U.S. dollar is trading at 139.73 yen compared to the 139.79 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0680 compared to yesterday’s $1.0735.

Asia

Asian stocks slumped on Wednesday as China manufacturing data disappointed and caution crept in ahead of a vote in Congress to raise the U.S. debt ceiling.

China’s Shanghai Composite index dropped 0.61 percent to 3,204.56 after data showed manufacturing activity in the country shrank faster than expected in May on weakening demand, raising uncertainty over post-Covid recovery.

Meanwhile, service sector activity expanded at the slowest pace in four months. The official manufacturing PMI dropped to a five-month low of 48.8 from 49.2 in April while the non-manufacturing PMI fell to 54.5 from 56.4.

Hong Kong’s Hang Seng index plunged 1.94 percent to 18,234.27 amid fears of worsening ties between Washington and Beijing after China declined a U.S. request for a meeting between defense ministers.

Japanese shares fell sharply, with a firmer yen and concerns about China’s uneven economic recovery keeping investors nervous.

The Nikkei average settled 1.41 percent lower at 30,887.88, snapping a four-day winning streak after the benchmark index scaled a 33-year high earlier this week. The broader Topix index fell 1.32 percent to 2,130.63.

Advantest, Fast Retailing and Tokyo Electron lost 1-2 percent. Toyota subsidiary Hino Motors jumped 12.3 percent following news of a merger plan with Daimler Truck-owned Mitsubishi Fuso Truck and Bus.

Japanese retail sales rose 5 percent in April from a year earlier while industrial output was down in the month for the first time in three months, separate reports showed earlier in the day.

Seoul stocks ended slightly lower, with the Kospi average closing down 0.32 percent at 2,577.12 after the release of disappointing factory output and retail sales data.

Tech heavyweights Samsung Electronics and SK Hynix both fell over 1 percent while battery maker LG Energy Solution rallied 3.3 percent.

Australian stocks tumbled to reach over two-month lows after data showed a bigger-than-expected rise in inflation through April. China growth concerns also weighed.

The benchmark S&P ASX 200 fell 1.64 percent to 7,091.30 while the broader All Ordinaries index ended 1.54 percent lower at 7,273.50, dragged down by mining and energy stocks.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 index ended down 0.55 percent at 11,813.01.

Europe

European stocks were moving lower on Wednesday as lower commodity prices on the back of disappointing manufacturing data from China pulled down mining and energy stocks.

Traders also watched the latest developments surrounding the U.S. debt ceiling bill.

The pan European STOXX 600 was down 0.2 percent at 455.63 after losing 0.9 percent on Tuesday.

The German DAX, France’s CAC 40 and the U.K.’s FTSE 100 were down between 0.2 percent and half a percent.

Anglo American, Glencore, BP Plc and Shell lost 1-2 percent after China reported a contraction in manufacturing activity in May.

Entain, owned by Ladbrokes, fell over 2 percent after the company revealed it expects to be hit by a large fine as part of an investigation by Britain’s tax authority over historic corporate misconduct involving former third-party suppliers.

B&M European Value Retail S.A. jumped 5.6 percent after the discount retailer said it expects current adjusted core earnings to be higher in 2024.

Bloomsbury Publishing gained 2 percent after FY23 profit and revenue beat expectations.

Retailer WH Smith added 1 percent after lifting its full-year guidance.

Credit Suisse Group shares were little changed after reports that it has scrapped plans to set up a locally incorporated bank in China.

In economic releases, flash figures released earlier today showed French inflation eased to 6 percent from 6.9 percent in April. Germany’s CPI report is due later in the day.

U.S. Economic Reports

MNI Indicators is due to release its report on Chicago-area business activity in the month of May at 9:45 am ET. The Chicago business barometer is expected to dip to 47.0 in May from 48.6 in April, with a reading below 50 indicating a contraction.

At 10 am ET, the Labor Department is scheduled to release its report on job openings in the month of April. Job openings are expected to decrease to 9.4 million in April from 9.6 million in March.

Boston Federal Reserve President Susan Collins is due to give closing remarks before a virtual Fed Listens event to discuss challenges and opportunities following the disruptions of the COVID-19 pandemic at 12:20 pm ET.

At 1:30 pm ET, Philadelphia Federal Reserve President Patrick Harker is scheduled to participate in a fireside chat on the global macroeconomy and monetary conditions before the Official Monetary and Financial Institutions Forum.

Federal Reserve Board Governor Philip Jefferson is also due to speak virtually on Financial Stability and the U.S. Economy to the 22nd Annual International Conference on Policy Challenges for the Financial Sector at 1:30 pm ET.

At 2 pm ET, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.