The Tuesday Market Minute
- Global stocks post solid gains as tech continues to climb and China notches its strongest industrial output rebound since the start of the year.
- Apple will hold its annual product launch event in Cupertino, California later today, although new iPhones aren’t expected until October.
- The Fed kicks-off its two-day rate setting meeting today in Washington, with a statement slated for 2:00 pm Wednesday.
- Oil prices bounce higher despite a gloomy IEA report that trims its 2020 demand forecast.
- U.S. equity futures suggest a firmer open on Wall Street ahead of export data at 8:30 am Eastern time, industrial production figures at 9:15 am Eastern time and after-the-bell earnings from FedEx and Adobe.
U.S. equity futures extended gains Tuesday, with tech stocks pacing Wall Street for a second consecutive session, as investors cheered data showing a big industrial comeback in China and continued to look for a near-term result from myriad coronavirus vaccine trials.
China’s official statistics office said industrial production in the world’s second-largest economy surged 5.6% last month, the strongest reading of the country’s most important sector since the global coronavirus pandemic began in early January.
The stronger-than-expected tally lifted stocks in Asia, at least outside of Japan, and provided early momentum for the European trading session, which was boosted by the ongoing sentiment surrounding AstraZeneca’s (AZN) – Get Report decision to resume its coronavirus vaccine trial earlier this week.
On Wall Street, tech stocks look set to lead the session again Tuesday ahead of Apple Inc. (AAPL) – Get Report annual product launch event at its Cupertino, California campus later this morning. Supply chain disruptions in Asia during the peak of the coronavirus pandemic are likely to push the launch of new iPhones into October, but analysts are still expecting to see a new Apple Watch Series 6 today, as well as possible updates to the tech-giants iPad series.
Futures contracts tied to the Nasdaq Composite Index, which closed above the 11,000 point mark last night but still sits some 8.4% south of its September 2 all-time high, are priced for a 110 point opening bell gain.
Contracts tied to the Dow Jones Industrial Average, meanwhile, suggest a 175 point bump at the start of trading, just after August industrial production data at 9:15 am Eastern time, while those linked to the S&P 500 are priced for a 23 point opening bell gain.
The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, was marked 0.145% lower in overnight trading at 92.907 as the Chinese yuan leaped to a 16-month high of 6.7725 following the surprise industrial output reading.
Benchmark 10-year Treasury note yields drifted modestly higher, to 0.681%, as the Federal Reserve kicks-off its two-day rate setting meeting in Washington.
European stocks were modestly higher in early Tuesday trading, but gains were capped by a stronger euro, which edged to 1.1882 as the dollar slipped. A stronger-than-expected reading of German investor sentiment, however, provided an early-session boost, with the Stoxx 600 benchmark pegged 0.7% higher in the opening hours of trading.
Global oil prices were also higher on the session, thanks in part to the weaker U.S. dollar and despite a report from the International Energy Agency in Paris which cut its forecast for 2020 demand to 91.7 million barrels per day as it sees a slowdown in growth between now and the end of the year.
“We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said.”In addition, there is the potential that a second wave of the virus (already visible in Europe) could cut mobility once again.”
WTI contracts for October delivery, the U.S. benchmark, traded 70 cents higher from their Monday close in New York at $37.96 per barrel in early European dealing while Brent contracts for November, the new global benchmark, were seen 64 cents higher at $40.25 per barrel.
Overnight in Asia, Japan’s Nikkei 225 was the regional market outlier, falling 0.44% to close at 23,454.89 points as the country’s ruling Liberal Democratic Party voted to install Yoshihide Suga to replace the retiring Shinzo Abe was party leader, paving the way for the 71-year old former aid to become the country’s next Prime Minister.
Elsewhere in the region, solid session gains in China and South Korea boosted the MSCI ex-Japan benchmark to a 0.55% gain heading into the final hours of trading.