The Tuesday Market Minute
- Global stocks edge higher, while the dollar slumps and gold retraces recent highs, amid mixed signals on U.S.-China relations.
- U.S. deepens its blacklisting of China-backed Huawei Technologies, but says the Phase One trade agreement remains on track and won't be subject to a near-term review.
- Global coronavirus cases rise past 21.8 million, with fatalities rising to 774,000, as the resurgence continues to flare in major economies around the world.
- The U.S. dollar slumps to two-year lows on foreign exchange markets, which helps gold prices rise back over the $2,000 mark.
- Oil prices edge higher after OPEC ministers say member states are mostly in compliance with the deeper production cuts unveiled earlier this summer.
- U.S. equity futures suggest firmer open on Wall Street after better-than-expected second quarter earnings from Walmart and Home Depot.
U.S. equity futures edged modestly higher Tuesday, while the dollar retreated to 2018 lows and gold traded past the $2,000 mark, as investors digested mixed signals on U.S.-China relations and prepped for two key retail earnings before the start of trading.
The U.S. government's decision to expand its blacklisting of China-backed Huawei Technologies late Monday, a move Secretary of State Mike Pompeo said "dealt a direct blow to Huawei and the repressive Chinese Communist Party by further limiting Huawei’s ability to acquire U.S. technology and compromise the integrity of the world’s networks and Americans’ private information" tamed markets in Asia overnight , while adding to safe-haven flows that continue to lift hard-asset prices such as gold and iron ore futures.
The blacklist expansion, which effectively prohibits Huawei from doing business in the semiconductor space with more companies and countries around the world, followed statements from President Donald Trump and his administration Monday that suggested the U.S.-China trade agreement was still intact and would not be subject to a detailed review anytime soon.
The mixed signals kept markets in a tight range during European trading, as well, as investors looked to the potential for a breakthrough in stimulus negotiations in Washington and tracked the ongoing resurgence in global coronavirus cases, which topped 21.8 million around the world as fatalities rose to 774,000.
U.S. equity futures look set for improving opening bell gains as a result, following on from last night's record-high close for the Nasdaq, as investors look to before-the-bell earnings from retail giants Walmart (WMT) - Get Walmart Inc. Report and Home Depot (HD) - Get Home Depot, Inc. Report for early direction.
Home Depot, in fact, smashed Wall Street's second quarter earnings forecasts with a bottom line of $4.02 per share on sales of $38.1 billion, a staggering 27.75% gain from the same period last year.
Walmart, too, topped Street forecasts as a near doubling of online sales boosted its top line to an all-time high of $137.7 billion.
Futures contracts tied to the Dow Jones Industrial Average suggest a 95 point bump at the start of trading while those linked to the S&P 500, which closed within a few points of its all-time high last night, are set to gain 9 points at the start of trading.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.3% lower at 92.568 in overnight trading, the lowest since 2018, while gold prices, which have risen around 32% so far this year, climbed back over the $2,000 mark as the dollar slumped lower and investors reacted to billionaire investor Warren Buffett's newly-revealed stake in Barrick Gold.
Benchmark 10-year Treasury bond yields, meanwhile, were holding at 0.667% after last week's heavy auction calendar, which brought $112 billion in new paper to the market, and ahead of Wednesday's release of minutes of the Federal Reserve's two-day rate setting meeting at the end of July.
European stocks were little-changed at the start of trading in London and Frankfurt, with the Stoxx 600 marked 0.11% higher, lead by a 0.17% gain for the trade-sensitive DAX performance index in Germany. Britain's FTSE 100, meanwhile, edged 0.07% higher as the firmer pound, which approached a multi-year high of 1.32 against the U.S. dollar, trimmed gains for export-focused stocks on the benchmark.
Global oil prices were also modestly higher, taking Brent crude firmly past the $45 mark, after OPEC ministers said that cartel members were in compliance with the deeper production cuts that were agreed earlier this year.
WTI contracts for September delivery, the U.S. benchmark, traded 6 cents higher from their Monday close in New York and were changing hands at $42.95 per barrel in early European dealing while Brent contracts for October, the global benchmark, were seen 16 cents hihger at $45.53 per barrel.
Overnight in Asia, Japan's Nikkei 225 ended the session with a 0.2% gain that took the regional benchmark past the 23,000 point level for the first time since early June, while the region-wide MSCI ex-Japan index was marked 0.1% higher heading into the final hours of trading.