The Tuesday Market Minute
- Global stocks edge cautiously higher, but oil's extended collapse casts a pall over equity market sentiment.
- U.S. crude tumbles another 20% to trade in the $10 per barrel range as storage concerns, but prices rebound modestly as the dollar weakens.
- European stocks bump higher after stronger-than-expected earnings from UBS and Novartis, with investors eyeing Thursday's ECB meeting for signs of fresh stimulus.
- U.S. earnings in focus this week with 169 S&P 500 companies reporting, including Google, Apple, Microsoft, Amazon and Facebook.
- Wall Street futures suggest a firmer open ahead of earnings from 3M, Caterpillar, Pfizer, PepsiCo and Merck as well as Redbook retail sales at 8:55 Eastern time.
U.S. equity futures traded higher Tuesday, while global oil prices pared some of the losses from their historic slump, as investors looked to a key series of earnings from the world's biggest tech companies this week for a read on the strength of broader market sentiment.
Oil's ongoing collapse, however, which has pulled U.S. crude prices back into the $10 per barrel range, has cast a pall over stocks this week as investors worry that massive losses could trigger selling in other markets and suggest a gloomy outlook for the pace of any global recovery once economies around the world begin to re-open from coronavius lockdowns.
Corporate earnings, too, have been largely disappointing, with companies from all sectors slashing dividends and pulling full-year guidance amid the uncertainty linked to both the pandemic's length and the economy's ability to rebound.
First quarter earnings are on pace to decline by around 15% from last year, according to Refinitiv data, with a another 33.3% contraction forecast for the three months ending in June.
However, with a stronger-than-expected quarterly report from Netflix last week, investors are hopeful that FAANG brethren such as Google parent Alphabet (GOOGL) - Get Report, which reports after the close of trading today, as well as Amazon (AMZN) - Get Report, Facebook (FB) - Get Report and Apple (AAPL) - Get Report, which report Wednesday and Thursday, will set the tone for an extended rally into the close of the week.
First quarter updates from 3M Co (MMM) - Get Report, Pfizer (PFE) - Get Report, PepsiCo (PEP) - Get Report and Caterpillar (CAT) - Get Report, all important barometers for the strength and breadth of any U.S. recovery, are slated to arrive before the start of trading today, as well.
With earnings in the windscreen, and policy statements from the Federal Reserve and the European Central Bank due Wednesday and Thursday respectively, U.S. equity futures could manage only modest gains heading into the opening bell,
Futures contracts tied to the Dow Jones Industrial Average set for a 310 point gain and those linked to the S&P 500 priced for a 33 point advance. Nasdaq Composite futures are indicating an 100 point jump.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.54% lower at 99.507, a move that helped oil prices shrug-off the ongoing concern over the lack of storage for unwanted crude.
That concern has continued to tame speculators wary of being stuck with futures contracts that would see them take physical delivery without having a place to put it.
Prices were also pressured by a move from the United States Oil Fund (USO) - Get Report, the world's biggest oil ETF, to sell its entire portfolio of WTI futures contracts for June delivery over the next three days.
Front-month WTI futures contracts -- the new benchmark for U.S. prices that would have owners taking delivery of crude in June -- were last seen 95 cents lower from their Monday close in New York and changing hands at $11.86 per barrel.
Brent futures for June delivery, which benchmark around 60% of global crude purchases, were marked 36 cents higher at $20.35 per barrel, not far from the 1999 low of $16 a barrel the contract touched last week.
Overnight in Europe, a set of modestly stronger-than-expected quarter earnings from Swiss banking giant UBS and domestic pharmaceutical colleague Novartis helped put stocks on the front foot Tuesday, with investors also eyeing Thursday's ECB statement for any possible additions to its E750 billion bond buying program.
The region-wide Stoxx 600 was marked 1.3% higher in the early hours of trading, while Britain's FTSE 100 managed to claw its way into a 1.25% gain despite a 1.8% slump for oil major BP plc, and a 0.66% decline for HSBC Plc, both of which published weaker-than-expected first quarter results before the start of trading.
Overnight in Asia, Japan's Nikkei 225 edged 0.06% higher in a muted session to close at 19,771.19 points while a mixed session around the region, lead by a 1.22% advance for the ASX in Australia, boosted the MSCI ex-Japan index 0.6% heading into the final hours of trading.