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Futures Pointing To Initial Strength On Wall Street
US Market
The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to move to the upside following the mixed performance seen in the previous session.
Optimism about strong corporate earnings may contribute to initial strength on Wall Street as the earnings season continues to pick up steam.
After moving notably higher last week, the major U.S. stocks indexes turned in a mixed performance during trading on Monday. The Dow edged modestly lower, while the broader Nasdaq and S&P 500 moved to the upside.
The Dow climbed well off its worst levels of the day but still ended the day down 36.15 points or 0.1 percent at 35,258.61. Meanwhile, the Nasdaq advanced 124.47 points or 0.8 percent to 15,021.81 and the S&P 500 rose 15.09 points or 0.3 percent to 4,486.46.
Stocks saw initial weakness following recent strength in the markets, which lifted the Dow and the S&P 500 to their best closing levels in a month last Friday.
Worries about the global economic outlook also weighed on the markets after data showed the Chinese economy hit its slowest pace of growth in a year in the third quarter, hurt by power shortages, supply bottlenecks, sporadic Covid-19 outbreaks and major wobbles in the property sector.
China’s GDP expanded 4.9 percent year-on-year in the third quarter of 2021, the National Bureau of Statistics said, missing forecasts for 5.2 percent and down sharply from 7.9 percent in the three months prior.
An advance by Treasury yields also contributed to the initial drop, although selling pressure waned as yields pulled back well off their highs.
The pullback by treasury yields came after the Federal Reserve released a report unexpectedly showing a steep drop in industrial production in the month of September.
The Fed said industrial production tumbled by 1.3 percent in September following a revised 0.1 percent dip in August.
The sharp decline surprised economists, who had expected industrial production to edge up by 0.2 percent compared to the 0.4 percent increase originally reported for the previous month.
Most of the major sectors ended the day showing only modest moves, although considerable strength was visible among housing stocks.
Reflecting the strength in the sector, the Philadelphia Housing Sector Index climbed 1.5 percent to its best closing level in over a month.
The strength among housing stocks came after a report released by the National Association of Home Builders showed a notable improvement in U.S. homebuilder confidence in the month of October.
The report said the NAHB/Wells Fargo Housing Market Index climbed to 80 in October from 76 in September. Economists had expected the index to come in unchanged.
Retail and software stocks also saw notable strength on the day, while biotechnology, airline and gold stocks moved to the downside.
U.S. Economic Reports
A report released by the Commerce Department on Tuesday showed an unexpected decrease in new U.S. residential construction in the month of September.
The Commerce Department said housing starts fell by 1.6 percent to an annual rate of 1.555 million in September from a revised rate of 1.580 million in August.
Economists had expected housing starts to inch up to a rate of 1.620 million from the 1.615 million originally reported for the previous month.
The report also showed building permits plunged by 7.7 percent to an annual rate of 1.589 million from a revised rate of 1.721 million in August.
Building permits, an indicator of future housing demand, were expected to drop to a rate of 1.680 million from the 1.728 million originally reported for the previous month.
At 1 pm ET, Atlanta Federal Reserve President Raphael Bostic is scheduled to give introductory remarks before a Federal Reserve Exploring Careers in Economics event.
Bostic is also due to participate in a virtual interview, Back to Work: Helping the Long-Term Unemployed before an event hosted by The Hill at 2:50 pm ET.
Europe
European shares have struggled for direction on Tuesday as investors await more earnings for fresh insight into how companies are faring with inflation and supply-chain disruptions.
While the French CAC 40 Index is down by 0.1 percent, the German DAX Index is just above the unchanged line and the German DAX Index is up by 0.1 percent.
The British pound hit a four-week high versus the dollar on expectations the Bank of England could hike rates towards the end of this year.
Sweden’s Ericsson dropped half a percent after reporting a hit from global supply chain problems.
Telecoms operator Tele2 lost almost 4 percent after posting quarterly core earnings in line with market expectations.
Delivery Hero SE shares rose over 1 percent. The German online food ordering company said it has invested $235 million in on-demand delivery startup Gorillas Technologies GmbH.
French food group Danone fell more than 2 percent. The company reiterated 2021 guidance, expecting a return to profitable growth in the second half, and fiscal year recurring operating margin broadly in line with 2020.
British homebuilder Bellway advanced 1.7 percent after its profits more than doubled in the year to end July.
Miners Anglo American and Antofagasta rose over 1 percent as copper prices rose.
British Airways owner IAG tumbled 3 percent after brokerage Berenberg downgraded the stock rating and cut its target price on the stock.
Hochschild Mining jumped 6 percent. The company announced its plan to demerge shares representing 80 percent of the entire issued share capital of indirect subsidiary Aclara, a development-stage rare earth mineral resources company.
Asia
Asian stocks rose broadly on Tuesday as Treasury yields edged lower after disappointing data from China and the United States.
Chinese shares clawed back losses a day after the country reported its weakest economic growth in a year.
The benchmark Shanghai Composite index rose 25.02 points, or 0.70 percent, to 3,593.15 while Hong Kong’s Hang Seng index ended up 377.46 points, or 1.49 percent, at 25,787.21.
Japanese shares ended notably higher as tech stocks continued to be on the radar of many investors. The Nikkei average climbed 190.06 points, or 0.65 percent, to 29,215.52, while the broader Topix index closed 0.36 percent higher at 2,026.57.
Chip-making equipment maker Tokyo Electron gained 1.9 percent, tech investment giant SoftBank Group jumped 3.1 percent and robot maker Fanuc rose 1.6 percent.
Shippers firms soared, with Kawasaki Kisen and Nippon Yusen climbing 8.6 percent and 7.4 percent, respectively.
Australian markets ended a choppy session little changed, with miners losing ground after BHP reported a decline in first-quarter iron ore output.
The benchmark S&P/ASX 200 index finished marginally lower at 7,374.90, snapping a three-session winning streak.
The broader All Ordinaries index ended with a positive bias at 7,690.20 as minutes from the RBA’s October 5 meeting reiterated a dovish rate outlook.
Mining giant BHP closed 2 percent lower while rival Rio Tinto lost 3.3 percent and Fortescue Metals Group dropped 1.2 percent.
Gaming giant Tabcorp declined 2.7 percent after announcing plans to split its businesses by mid-2022. Tech stocks followed their U.S. peers higher, with heavyweight Afterpay climbing 2.7 percent.
Seoul stocks rebounded as concerns about the new coronavirus and the volatility in the currency markets eased. The Kospi average inched up 22.36 points, or 0.74 percent, to close at 3,029.04 as South Korea’s new virus cases stayed below 2,000 for the 11th straight day amid progress in vaccinations.
Commodities
Crude oil futures are climbing $0.62 to $83.06 a barrel after inching up $0.16 to $82.44 a barrel on Monday. Meanwhile, after slipping $2.60 to $1,765.70 an ounce in the previous session, gold futures are rising $12.80 to $1,778.50 an ounce.
On the currency front, the U.S. dollar is trading at 114.24 yen compared to the 114.32 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1648 compared to yesterday’s $1.1610.
