The Tuesday Market Minute
- Global stocks edge lower as oil prices leap to multi-year highs following the collapse of OPEC talks in Vienna.
- OPEC+ leaders fail to agree on an long-term extension to the cartel’s output curbs, throwing near-term changes in doubt and pushing U.S. crude to the highest levels in seven years.
- Didi Global shares plunge after cybersecurity authorities in China order app sellers to remove it from download by new customers.
- CDC data shows 157.3 million Americans have now been fully vaccinated against the coronavirus, with around 330.6 million doses administered as of Sunday.
- U.S. equity futures suggest a softer open on Wall Street ahead of holiday-shortened week highlighted by Fed minutes on Wednesday and weekly jobless claims data on Thursday.
Wall Street futures slipped lower heading into the start of a holiday-shortened week, with focus in global markets shifting to the ongoing drama in oil prices and another crackdown on tech stocks by authorities in China.
U.S. crude traded at the highest levels in seven years in overnight dealing following a weekend collapse in talks among OPEC leaders that had been designed to reach an agreement on production levels.
Reports suggest the United Arab Emirates balked at the cartel’s insistence on extending production cuts, which are taking more than 5 million barrels from the market each day, until the end of next next year, throwing any near-term changes in output into chaos as leaders walked away from the five-day talks held virtually through OPEC’s headquarters in Vienna.
WTI futures for August delivery were marked 14 cents higher from Friday’s closing levels in New York to traded at $76.48 per barrel, while Brent contracts for September, the global benchmark, added 29 cents to trade at $77.44 per barrel.
The gains in oil, alongside persistent concern for faster inflation and moderating economic growth linked to the spread of the Delta variant of the coronavirus, put downward pressure on U.S. equity futures heading into the start of the week.
Futures contracts tied to the Dow Jones Industrial Average are indicating a modest 15 point decline while those linked to the S&P 500, which is riding a seven-day winning streak of record highs — the longest since 1997 — are priced for a 4 point pullback
Tech stocks are also looking modestly weaker, with the Nasdaq down around 15 points, although much of the overnight market focus was on the fate of China-based ride sharing group Didi Global (DIDI) – Get Report, which fell 22% in pre-market trading after cybersecurity authorities in Beijing ordered it to be removed from the country’s app stores.
Tesla (TSLA) – Get Report shares were caught in the downdraft of tech stocks with a heavy reliance on China sales, but a $5 pre-market price target boost by JPMorgan, to $160 per share, limited some of the downside moves.
Pfizer (PFE) – Get Report shares were also active, falling 1% in pre-market trading to $39.33 each, following a study that showed its coronavirus vaccine was less effective against the Delta variant of the virus.
In other markets, European stocks were muted in early dealing, with the Stoxx 600 little-changed from its Monday close in Frankfurt, while China’s crackdown on Didi pulled both the Shanghai Composite and the Shenzhen 300 into the red by the end of the Tuesday session.