U.S. Stocks May Move Modestly Lower In Early Trading

The major U.S. index futures are currently pointing to a modestly lower open on Wednesday following the lackluster performance seen in the previous session.

The major U.S. averages ended mixed on Tuesday after a somewhat cautious session, with investors weighing the likely impact of surging cases of the Delta variant of the coronavirus on the pace of the economic recovery.

The Nasdaq closed at a fresh record high, while the Dow and the S&P 500 drifted lower. Expectations that the Federal Reserve will maintain its accommodative monetary policy for a longer duration helped limit the market’s downside.

The Dow ended down by 269.09 points or 0.8 percent at 35,100.00. The S&P 500 settled at 4,520.03, recording a loss of 15.40 points or 0.3 percent, while the Nasdaq ended up by 10.81 points or 0.1 percent at 15,374.33, after climbing to a new all-time high of 15,403.44.

Shares of Boeing (BA) drifted lower after Ryanair said it had ended discussions with the company with regard to a proposed purchase of Max 10 jets worth several billion dollars due to differences over price.

Amgen (AMGN) shares declined more than 2.5 percent following a rating downgrade by Morgan Stanley. Merck (MRK), down 1.6 percent, also fell due to a rating downgrade.

3M (MMM) shed more than 4 percent. Honeywell International (HON), Coca-Cola (KO), Johnson & Johnson (JNJ), Walmart (WMT), IBM (IBM), Verizon (VZ) and Walgreens Boots Alliance (WBA) lost 1 to 2 percent.

Travelers Companies (TRV) climbed more than 2.5 percent. Walt Disney (DIS) shares gained about 1.8 percent and Apple (AAPL) surged up 1.4 percent. Netflix (NFLX) gained more than 2.5 percent, and Amazon (AMZN) ended nearly 1 percent up.

Shares of medical device manufacturer Tandem Diabetes Care (TNDM) soared more than 13 percent, buoyed by news the company is set to enter the S&P MidCap 400 effective from September 20.

Commodity, Currency Markets

Crude oil futures are jumping $0.93 to $69.28 a barrel after slumping $0.94 to $68.35 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,800.40, up $1.90 compared to the previous session’s close of $1,798.50. On Tuesday, gold plunged $35.20.

On the currency front, the U.S. dollar is trading at 110.19 yen compared to the 110.28 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1827 compared to yesterday’s $1.1840.

Asia

Asian stocks ended mixed on Wednesday as traders weighed the likely impact of the spread of the Delta variant of coronavirus in the region.

Chinese shares ended on a flat note amid bets that the worst of Beijing’s regulatory crackdown has passed. Hong Kong’s Hang Seng index ended down 0.1 percent at 26,320.93.

Japanese shares ended near a six-month high after GDP growth for April-June was upwardly revised to an annual pace of 1.9 percent from a preliminary estimate of 1.3 per cent. Investors also expressed hopes that the coronavirus-hit economy would recover under stimulus packages.

The Nikkei 225 Index climbed 265.07 points, or 0.9 percent, to 30,181.21, its highest since March 18. The broader Topix closed 0.8 percent higher at 2,079.61.

Heavyweight SoftBank Group jumped 4.6 percent after announcing a $7 billion share-swap deal with Deutsche Telekom. Tokyo Electron, Advantest, Rakuten Group and Nikon climbed 2-4 percent.

Australian shares ended lower alongside a broad commodity sell-off as the greenback strengthened. The benchmark S&P/ASX 200 Index dropped 18.30 points, or 0.2 percent, to 7,512, while the broader All Ordinaries Index ended down 18.90 points, or 0.2 percent, at 7,807.50.

BHP Billiton fell 1 percent and Rio Tinto dropped half a percent as copper prices hit their lowest level in five months.

Gold miners Newcrest Mining, Evolution Mining and Northern Star Resources lost 3-5 percent after gold retreated over 1.5 percent on Tuesday, hit by a buoyant dollar and higher yields. Energy stocks saw modest gains as oil steadied after a two-day decline.

Seoul stocks ended down for the second day running as tech stocks came under pressure on concerns about regulations against online platform giants. The benchmark Kospi fell 24.43 points, or 0.8 percent, to settle at 3,162.99.

Tech giant Kakao plunged 10 percent and Naver plummeted 7.9 percent after lawmakers warned the nation’s internet giants against abusing their market dominance in the pursuit of profits.

Europe

European stocks have succumbed to selling pressure on Wednesday amid worries about the slowing pace of the global economic recovery due to the rapid spread of the more infectious Delta variant of the coronavirus.

Investors also looked ahead to Thursday’s European Central Bank meeting that will see policymakers debate a cut in its stimulus.

Governing Council member and Austria’s central bank chief Robert Holzmann told Eurofi Magazine that the ECB may normalize policy “sooner than most financial market experts expect.”

While the German DAX Index has tumbled by 1.3 percent, the U.K.’s FTSE 100 Index is down by 0.7 percent and the French CAC 40 Index is down by 0.6 percent.

Recruitment company Adecco Group AG has moved to the downside a day after it announced the acquisition of QAPA.

Spanish turbine maker Siemens Gamesa has also slumped after JPMorgan downgraded the stock’s rating to Neutral.

French drug major Sanofi has also declined. The company said it has entered into a definitive merger agreement to buy Kadmon Holdings, Inc. (KDMN), the developer of Rezurock, a recently FDA-approved treatment for chronic graft-versus-host disease.

Biffa has also fallen. The British waste management firm reported that its trading in the first half of the year has continued in line with the Board’s revised expectations.

On the other hand, B&M European Value Retail S.A. has moved sharply higher. The variety store company said that group revenue to date has been broadly in line with market expectations.

Avon Protection, a maker of life-critical respiratory and ballistic personal protection systems, has also risen after bagging a contract worth up to $87.6 million from the U.S. Army.

Airlines including EasyJet Plc and Ryanair Holdings have also jumped after reports that the U.K.’s “traffic light” travel system could be scrapped from next month.

Smiths Group has also advanced. The industrial technology company announced that it has agreed the sale of medical devices supplier Smiths Medical to ICU Medical, Inc. (ICUI) on terms that are superior to the previously announced transaction entered into with TA Associates.

In economic news, France’s trade deficit increased to 6.96 billion euros from 6.05 billion euros in June on falling exports, data published by customs office revealed. In the same period last year, the shortfall totaled EUR 6.79 billion.

U.S. Economic Reports

The Labor Department is due to release the results of its Job Openings and Labor Turnover Survey for the month of July at 10 am ET. Economists expect job openings to dip to 10.0 million in July from 10.073 million in June.

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

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, at 2 pm ET.

At 3 pm ET, the Fed is scheduled to release its report on consumer credit in the month of July. Consumer credit is expected to increase by $25.0 billion.

Dallas Federal Reserve Bank President Robert Kaplan is due to participate in a Discussion of Economic Developments and Implications for Monetary Policy before a virtual Town Hall hosted by the Dallas Fed at 6 pm ET.