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Futures Pointing To Initial Rebound On Wall Street
US Market
The major U.S. index futures are currently pointing to modestly higher open on Tuesday, with stocks likely to move back to the upside after ending yesterday’s lackluster session moderately lower.
Stocks may regain ground following the lower close on Monday, although trading activity is likely to remain subdued as Election Day gets underway.
Polls show an extremely tight race between Vice President Kamala Harris and former President Donald Trump, suggesting the outcome of the presidential election may not be known by the end of the night.
The results of House and Senate races are also likely to be in focus, as the makeup of Congress could affect how much the next president can accomplish.
“With the race still too close to call, it seems investors aren’t ready to reposition portfolios until we get the result,” said Dan Coatsworth, investment analyst at AJ Bell. “However, the moment we get clarity on the winner could lead to some sharp movements in the market as investors play catch-up with the election.”
Traders also continue to look ahead to the Federal Reserve’s monetary policy decision, which is due to be announced on Thursday.
The Fed is widely expected to lower interest rates by another 25 basis points, but traders will be looking to the accompanying statement for clues about the likelihood of future rate cuts.
After turning in a strong performance during last Friday’s session, stocks showed a lack of direction over the course of the trading day on Monday. The major averages bounced back and forth across the unchanged line before eventually closing in negative territory.
The Dow underperformed its counterparts, sliding 257.59 points or 0.6 percent to 41,794.60. The Nasdaq fell 59.93 points or 0.3 percent to 18,179.98 and the S&P 500 dipped 16.11 points or 0.3 percent to 5,712.69.
The choppy trading on Wall Street came as traders seemed reluctant to make significant moves ahead of the U.S. elections on Tuesday.
The more notable move to the downside by the Dow came as Intel (NASDAQ:INTC) and Dow Inc. (NYSE:DOW) came under pressure following news they will removed from the blue chip index.
Meanwhile, shares of Nvidia (NASDAQ:NVDA) rose on news the AI darling will replace Intel in the Dow prior to the start of trading on Friday. Paint maker Sherwin-Williams (NYSE:SHW) also surged higher following news it will replace Dow.
Reflecting the lackluster performance by the broader markets, most of the major sectors showed only modest moves on the day.
Airline stocks showed a substantial move to the downside, however, with the NYSE Arca Airline Index tumbling by 2.5 percent.
On the other hand, energy stocks turned in a strong performance, as the price of crude oil surged after OPEC+ decided to delay plans to increase output.
Reflecting the strength in the energy sector, the Philadelphia Oil Service Index jumped by 1.7 percent and the NYSE Arca Oil Index climbed by 1.4 percent.
U.S. Economic News
A report released by the Commerce Department on Tuesday showed a substantial increase in the size of the U.S. trade deficit in the month of September, as imports surged and exports slumped.
The Commerce Department said the trade deficit widened to $84.4 billion in September from a revised $70.8 billion in August.
Economists had expected the trade deficit to jump to $84.1 billion from the $70.4 billion originally reported for the previous month.
The sharp increase in the size of the trade deficit came as the value of imports spiked by 3.0 percent to $352.3 billion, while the value of exports tumbled by 1.2 percent to $267.9 billion.
At 10 am ET, the Institute for Supply Management is due to release its report on service sector activity in the month of October.
The ISM’s services PMI is expected to edge down to 53.8 in October from 54.9 in September, although a reading above 50 would still indicate growth.
At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $42 billion worth of ten-year notes.
Europe
European stocks are turning in a mixed performance in cautious trading on Tuesday as investors react to mixed earnings updates and awaited interest rate decisions from the Bank of England and the Federal Reserve later this week.
Meanwhile, all attention is focused on what is being called the “closest race in history” in the 2024 U.S. Presidential election, with Donald Trump facing off against Kamala Harris.
While the U.K.’s FTSE 100 Index is down by 0.1 percent, the French CAC 40 Index is up by 0.2 percent and the German DAX Index is up by 0.3 percent.
In corporate news, Vestas, the world’s largest maker of wind turbines, has plummeted after lowering its projections for EBIT before special items in the Service segment to 450 million euros from 500 million euros.
Staffing company Adecco has also shown a significant move to the downside after its third quarter results missed consensus estimate.
Fashion retailer ASOS has also moved sharply lower after reporting a widened pretax loss for fiscal 2024.
Asset manager Schroders has also plunged after it reported £2.3 billion ($3 billion) of quarterly outflows and warned of more to come.
Luxury fashion company Hugo Boss has also slumped after reporting a decline in third-quarter net profit.
On the other hand, Belgian chemical maker Syensqo has soared as it unveiled plans to cut around 2 percent of its workforce.
Reinsurer Swiss Re has also jumped after it has agreed to sell the digital insurer’s European P&C business to Allianz Direct, the pan-European online insurer of Allianz Group.
Associated British Foods has also rallied as the Primark owner reported strong financial results for the year ending September 14, 2024, driven by revenue growth in its retail and foods businesses.
Infrastructure group Balfour Beatty has also risen on winning a $746 million (£575 million) Texas Interstate contract.
French construction-to-telecoms group Bouygues has also surged as nine-month core earnings came in slightly above expectations.
Dialysis company Fresenius Medical Care has also moved to the upside as its third quarter profit beat market views.
Asia
Asian stocks ended mostly higher on Tuesday after Chinese Premier Li Qiang expressed confidence that his government can pull off an economic recovery.
Additionally, a private survey showed Chinese services activity expanded at the fastest pace in three months in October.
The dollar was on the defensive and gold was little changed as the U.S. presidential election got underway, with polls predicting a tight race.
Oil prices were subdued in Asian trading after rallying almost 3 percent on Monday following OPEC+’s decision to delay restoring barrels to the market.
China’s Shanghai Composite Index surged 2.3 percent to 3,386.99 and Hong Kong’s Hang Seng Index jumped 2.1 percent to close at 21,006.97 after Chinese Premier Li Qiang said he is confident of meeting this year’s growth target and that there was room for more stimulus.
Observers hope a specific figure for the stimulus could emerge from this week’s meeting of the Standing Committee of National People’s Congress, the top body of China’s parliament.
There was also some cheer on the data front. Chinese service activity expanded at the fastest pace since July, a private survey showed today in a sign that consumer demand may be on the mend.
Japanese markets rallied as trading resumed after a long holiday weekend. The Nikkei 225 Index climbed 1.1 percent to 38,474.90, while the broader Topix Index settled 0.8 percent higher at 2,664.26.
Nintendo shares fell 3.9 percent. The gaming company today cut its annual operating profit forecast by 10 percent to 360 billion yen ($2.36 billion), as its ageing Switch console loses steam.
Seoul stocks ended lower as caution crept in ahead of the U.S. elections and the Federal Reserve’s interest rate decision due later this week, with the U.S. central bank widely expected to cut its main interest rate for a second straight time.
Geopolitical tensions also weighed after North Korea launched a salvo of ballistic missiles towards the sea off the east coast of the Korean Peninsula. The Kospi dropped 0.5 percent to 2,576.88.
Data showed earlier today that South Korean headline inflation slowed further in October to the weakest level in almost four years.
Australian markets fell as the Reserve Bank of Australia held the official cash rate at 4.35 percent and signaled no immediate plans for rate cuts.
The benchmark S&P/ASX 200 Index dipped 0.4 percent to 8,131.80, with financials and consumer stocks leading losses. The broader All Ordinaries Index closed 0.4 percent lower at 8,387.80.
Domino’s Pizza Enterprises slumped 6.3 percent after an announcement that long-time chief executive and managing director Don Meij will retire effective 6 November.
Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index rose 0.5 percent to 12,658.30.
Commodities
Crude oil futures are climbing $0.56 to$72.03 a barrel after surging $1.98 to $71.47 a barrel on Monday. Meanwhile, after slipping $3 to $2,746.20 an ounce in the previous session, gold futures are inching up $5.30 to $2,751.50 an ounce.
On the currency front, the U.S. dollar is trading at 152.03 yen compared to the 152.13 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0897 compared to yesterday’s $1.0878.
