MARKET SNAPSHOT: Stock Futures Inch Up, Putting Indexes Near Records
August 20 2018 - 5:54AM
Dow Jones News
By Ryan Vlastelica
PepsiCo to buy SodaStream
U.S. stock-index futures were slightly higher on Monday, with
major indexes poised to open near multimonth highs as investors
remained optimistic that progress was being made in the contentious
trade disputes between the U.S. and its major trading partners.
What are the major markets doing?
Futures for the Dow Jones Industrial Average rose 61 points to
25,735, a gain of 0.2%. Futures for the S&P 500 were up 5
points to 2,856.50, a gain of 0.2%. Futures for the Nasdaq-100
added 25 points, or 0.3%, to 7,413.
U.S. equities rose sharply last week, on signs of improving
trade relations, as well as signs of stabilization in Turkey's
currency market. The Dow Jones Industrial Average jumped 1.4%, a
move that took it to its highest close since February. The S&P
500 added 0.6% and is within 1% of record levels. The Nasdaq
Composite Index dipped 0.3% over the course of last week, but it is
also within striking distance of record levels.
What factors are driving markets?
With the second-quarter earnings season largely over, trading
may continue to be driven by shifting geopolitical factors. Trade
will likely remain a key focus for investors, with any sign of
improving or deteriorating relations between the U.S. and China
driving a corresponding move in investor sentiment.
The latest trade development gave some room for optimism. The
Wall Street Journal reported that negotiators in both the U.S. and
China were mapping out talks with the aim
(http://www.marketwatch.com/story/us-china-plot-road-map-to-resolve-trade-dispute-by-november-2018-08-17-141032446)
of resolving the trade dispute by November. Such an outcome would
remove a huge overhang of uncertainty over the markets. The news
spurred big gains in Asian markets
(http://www.marketwatch.com/story/asian-markets-mostly-gain-on-us-china-trade-talk-hopes-2018-08-19).
However, this week will also see the imposition of 25% tariffs
on $16 billion worth of Chinese imports, an action by the Trump
administration that China has said it would retaliate against.
Investors are also continuing to pay close attention to troubled
regions like Turkey, where the lira and stock market have tumbled
(http://www.marketwatch.com/story/turkey-has-torn-up-the-playbook-on-dealing-with-emerging-market-crises-2018-08-17)
amid high inflation, political instability, and debt, and Italy,
which is struggling under a debt burden of its own
(http://www.marketwatch.com/story/as-the-greece-bailout-ends-worries-shift-to-italy-2018-08-20).
While U.S. companies have limited direct exposure to either
country, there are concerns that the weakness could spread into
other regions or signal a broader downturn in economic growth.
On Friday, both S&P Global Ratings and Moody's Investors
Service downgraded their view on Turkey's sovereign credit
(http://www.marketwatch.com/story/sp-global-moodys-both-downgrade-turkeys-sovereign-ratings-2018-08-17).
On Sunday, The Wall Street Journal reported that the Trump
administration rejected an effort by Turkey
(http://www.marketwatch.com/story/us-wont-consider-turkish-bank-relief-from-sanctions-until-pastor-is-freed-2018-08-19)
to tie the release of a U.S. pastor with relief for a major Turkish
bank facing billions of dollars in U.S. fines, telling Ankara other
issues are off the table until the minister is freed.
Opinion:If turmoil spreads in Europe, expect heavy flows into
U.S. stocks
(http://www.marketwatch.com/story/if-turmoil-spreads-in-europe-expect-heavy-flows-into-us-stocks-2018-08-18)
Looking ahead, Wednesday will see the release of minutes from
the Federal Reserve's most recent meeting, which could provide
insight into the central bank's thinking in terms of policy
changes.
What are market experts saying?
Rick Bensignor, president of Bensignor Strategies, said the
uptrend in stocks was showing signs of "exhaustion," although
"we're not opposed to putting on new long exposure if you
understand and accept that the risk to make money on that capital
is as high as its been in over 30 years."
He added that historically speaking, this week tend to be quiet
in terms of trading volume, as there is limited news from corporate
earnings or economic data. "Thus, expect lower volumes and
potentially exaggerated moves" as a result of the reduced
liquidity.
What stocks are in focus?
PepsiCo Inc. (PEP) said it would buy SodaStream International
Ltd (SODA) for $3.2 billion, a value that implies a 11% premium
(http://www.marketwatch.com/story/pepsico-to-acquire-israeli-based-sodastream-in-32-billion-deal-2018-08-20)
to SodaStream's Friday closing price.
Tesla Inc.(TSLA) will likely remain in focus as investors
continue to weigh the electric-car company's prospects for going
private, as Chief Executive Officer Elon Musk recently -- and
unexpectedly -- tweeted that he was attempting to do. Separately,
it was reported that PIF, Saudi Arabia's sovereign wealth fund, was
in talks to invest in Lucid Motors Inc
(http://www.marketwatch.com/story/saudi-fund-may-invest-more-than-1-billion-in-tesla-rival-lucid-motors-report-2018-08-19).,
a Tesla rival. Musk has reportedly been hoping an investment from
PIF could aid in his taking Tesla private.
Roche Holding AG's (ROG.EB) Alecensa cancer drug has been
granted marketing authorization in China
(http://www.marketwatch.com/story/roches-alecensa-gets-green-light-from-china-2018-08-20).
(END) Dow Jones Newswires
August 20, 2018 05:39 ET (09:39 GMT)
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