The major U.S. index futures are currently pointing to a slightly higher open on Tuesday, with early trading on Wall Street likely to be driven by reaction to congressional testimony from Federal Reserve Chair Jerome Powell.

Ahead of Powell’s remarks, the major index futures are currently pointing to a slightly higher open for the markets, with the S&P 500 futures up by 0.1 percent.

Powell is scheduled to deliver his semiannual monetary policy testimony before the Senate Banking Committee beginning at 10 am ET.

The Fed chief’s prepared remarks are likely to be released ahead of his testimony and could have a significant impact on early trading.

Traders are likely to pay close attention to Powell’s remarks, looking for additional clues about the outlook for interest rates.

“Everyone is expecting Fed Chair Powell to deliver his best hits of ‘we have more work to do’ and ‘higher for longer,” said Edward Moya, senior market analyst at OANDA.

He added, “Powell might not commit how much higher rates will go, but he will keep the door open for the Fed’s dot plots to move higher.”

Stocks showed a notable move to the upside in morning trading on Monday but gave back ground over the course of the session. The major averages pulled back well off their highs of the session, ending the day narrowly mixed.

After surging as much as 1.2 percent, the tech-heavy Nasdaq showed a significant pullback and closed down 13.27 points or 0.1 percent at 11,675.74.

Meanwhile, the Dow and the S&P 500 pulled back well off their best levels but closed modestly higher. The Dow crept up 40.47 points or 0.1 percent to 33,431.44 and the S&P 500 inched up 2.78 points or 0.1 percent to 4,048.42.

The early strength on Wall Street came as treasury yields moved notably lower amid optimism that the Federal Reserve is close to finishing its aggressive interest rate hikes.

Buying interest waned over the course of the session, however, as treasury yields rebounded ahead of congressional testimony by Federal Reserve Chair Jerome Powell.

Powell is due to testify before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday.

The Labor Department’s closely watched monthly employment report is also likely to attract attention later in the week.

Economists currently expect employment to increase by 200,000 jobs in February after jumping by 517,000 jobs in January, while the unemployment rate is expected to hold at 3.4 percent.

Steel stocks moved sharply lower over the course of the session, as China set a modest target for economic growth this year, raising concerns about the outlook for demand.

Reflecting the weakness in the sector, the NYSE Arca Steel Index plunged by 2.5 percent after ending last Friday’s trading at a twelve-year closing high.

Considerable weakness also emerged among gold stocks, resulting in a 1.8 percent drop by the NYSE Arca Gold Bugs Index.

The weakness in the gold sector came as the price of the precious metal ended the day unchanged after seeing early weakness.

Natural gas, chemical and housing stocks also came under pressure over the course of the session, while some strength remained visible among airline stocks.

Commodity, Currency Markets

Crude oil futures are falling $0.53 to $79.93 a barrel after climbing $0.78 to $80.46 a barrel on Monday. Meanwhile, after ending the previous session unchanged at $1,854.60 an ounce, gold futures are sliding $11.20 to $1,843.40 an ounce.

On the currency front, the U.S. dollar is trading at 136.04 yen compared to the 135.93 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0668 compared to yesterday’s $1.0681.

Asia

Asian stocks ended mixed on Tuesday, the dollar treaded water and bond yields eased amid bets that Fed Chair Jerome Powell will sound less hawkish during two-day testimony before Congress beginning later in the day.

Chinese stocks ended sharply lower after China’s new foreign minister Qin Gang warned of a potential conflict with the U.S. if Washington does not soften its rhetoric against China.

On the sidelines of the “two sessions” political gathering, he outlined China’s foreign policy agenda for the coming years. He signaled closer ties with Russia and termed the relationship with the U.S. and its allies as a source of tension and conflict.

Meanwhile, China’s exports and imports continued their recent declines at the start of the year, combined figures for January and February showed.

China’s Shanghai Composite Index slumped 1.11 percent to 3,285.10, while Hong Kong’s Hang Seng Index shed 0.3 percent to settle at 20,534.48.

Japanese shares eked out modest gains to reach a three-month high after data showed real wages dropped at the fastest pace since 2014 in January, putting less impetus on the central bank to tighten its ultra-loose policy.

The Nikkei 225 Index rose 0.3 percent to 28,309.16 ahead of the final policy meeting for Bank of Japan Governor Haruhiko Kuroda on Thursday and Friday. The broader Topix closed 0.4 percent higher at 2,044.98.

Higher oil prices boosted energy stocks, with Inpex Corp. and Japan Petroleum climbing 3 percent and 1.8 percent, respectively.

Seoul markets swung between gains and losses before finishing marginally higher. Tech heavyweights Samsung Electronics and SK Hynix dropped 1.3 percent and 0.9 percent, respectively, while battery maker LG Energy Solutions jumped 3.5 percent and chemical firm LG Chem added 1.9 percent.

South Korea’s GDP contracted 0.4 percent sequentially in the fourth quarter, revised central bank data showed earlier today, matching the advance estimate released in January.

Australian stocks rose, while the Aussie dollar and government bond yields slid after Reserve Bank Governor Philip Lowe said there were indications that inflation had peaked in the country.

The Reserve Bank of Australia softened its hawkish forward guidance after lifting its cash rate 25 basis points to 3.60 percent, the 10th straight move since last May.

Investors shrugged off mixed trade balance and retail sales data. The benchmark S&P/ASX 200 Index gained 0.5 percent to finish at 7,364.70, while the broader All Ordinaries Index ended 0.5 percent higher at 7,562.70. Mining stocks underperformed after Beijing set its lowest growth target ever.

InvoCare shares soared 35 percent after the funeral services provider received a non-binding takeover offer of $1.81 billion from asset manager TPG Global LLC.

Europe

European stocks are slightly higher on Tuesday as investors look for more clues on the outlook for U.S. interest rate hikes.

Eurozone short-dated bond yields hover around multi-year highs, as Federal Reserve Chair Jerome Powell starts his two-day testimony before Congress later in the day.

In economic news, official data showed German factory orders grew 1.0 percent in January, confounding expectations for a decline of 0.9 percent. Nonetheless, the pace of growth eased from a revised 3.4 percent in December.

Elsewhere, a survey showed British home prices unexpectedly jumped in February amid improvements in consumer confidence and the mortgage market.

While the U.K.’s FTSE 100 Index is up by 0.3 percent, the German DAX Index and the French CAC 40 Index are both up by 0.1 percent.

John Wood Group has surged. The engineering firm said it was considering rejecting the latest buyout proposal from private-equity firm Apollo Global Management.

Ashtead Group has also moved to the upside after the equipment rental firm forecast annual results ahead of its own estimates.

Zalando has also moved sharply lower after the online retailer said it would work on improving margins this year.

Meanwhile, Danish brewer Carlsberg has declined on news CEO Cees ‘t Hart has decided to retire after eight successful years.

British baker and fast-food chain Greggs has also moved to the downside after warning of inflationary pressures.

German automotive supplier Schaeffler has also slumped after reporting a decline in FY22 profit, cutting its dividend and issuing a cautious outlook for FY23.

Henkel, a chemical and consumer goods firm, has also fallen as it posted a 13.7 percent drop in adjusted earnings before interest and tax (EBIT) in 2022.

Meal-kit maker HelloFresh has also moved sharply lower after it forecast 2023 core profit below estimates.

U.S. Economic Reports

Federal Reserve Chair Jerome Powell is scheduled to deliver his semiannual monetary policy testimony before the Senate Banking Committee at 10 am ET.

Also at 10 am ET, the Commerce Department is due to release its report on wholesale inventories in the month of January. Wholesale inventories are expected to decrease by 0.4 percent.

The Treasury Department is scheduled to announce the results of this month’s auction of $40 billion worth of three-year notes at 1 pm ET.

At 3 pm ET, the Federal Reserve is due to release its report on consumer credit in the month of January. Consumer credit is expected to increase by $22.9 billion.

Stocks In Focus

Shares of WW International (WW) are moving sharply higher in pre-market trading after the company formerly known as Weight Watchers announced an agreement to acquire subscription telehealth platform Sequence.

Dick’s Sporting Goods (DKS) is also likely to see initial strength after the sporting goods retailer reported better than expected fourth quarter results and provided upbeat guidance.

On the other hand, shares of Rivian Automotive (RIVN) may come under pressure after the electric vehicle maker announced plans to sell $1.3 billion worth of bonds.




Futures Pointing To Slightly Higher Open Ahead Of Powell Testimony

2023-03-07 13:33:16

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