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Dow Futures Slip Lower Despite China PMI Data, Fresh Stimulus Hopes as U.S. Coronavirus Deaths Surge

Wall Street has rallied for four of the past five sessions, and even if Tuesday's pre-market gains hold, stocks are set to record their steepest first quarter losses since 1987.

The Tuesday Market Minute

  • Global stocks edge lower after stronger-than-expected China data raises hopes of a robust coronavirus recovery.
  • China sees sharp March rebound in economic activity, but analysts caution that recovery faces serious challenges.
  • U.S. coronavirus deaths top 3,000, with confirmed cases hitting 163,000, following the worst day in terms of fatalities since the outbreak began.
  • Global oil markets bounce from near 20-year lows after President Donald Trump attempts to broker a truce between Russia and Saudi Arabia on crude prices.
  • U.S. equity futures suggest a modestly firmer open on Wall Street on the final day of the first quarter and ahead of consumer confidence data at 10:00 am Eastern time.

U.S. equity futures slipped lower heading into the final trading day of the first quarter Tuesday after manufacturing activity data from China showed a sharp March rebound and lawmakers on Capitol Hill reportedly looked at ways to launch a fourth stimulus plans to support the flagging economy.

Wall Street has rallied for four of the past five sessions as of Monday's close, clawing back at a third of the 33% that equity markets shed amid the peak of the global coronavirus market meltdown earlier this month. 

Further gains could come Tuesday, as well, as fund managers hover up cheap stocks on the final trading day of the quarter in order to re-balance their portfolios with higher portions of equity holdings. 

Data from China earlier in the session partly-supported that thesis, with the National Bureau of Statistics saying economic activity bounced from a record low of 35.7 in February to 52.0 this month as factories and business came back online following strict travel restrictions put in place to slow the coronavirus outbreak.

With some investors betting on a so-called 'v-shaped' recovery, amid which data falls sharply amid the pandemic but rebounds almost immediately to pre-crisis levels, the China PMI figures provide a solid basis for near-term bullishness in beaten-down stocks. 

Bloomberg is also reporting that Congressional lawmakers are starting to examine details for a fourth stimulus plan, aimed at providing more state aid and assistance to the travel and mortgage markets, that could be worth $600 billion.

However, with domestic coronavirus deaths topping 3,000, following at least 540 fatalities on Monday -- the most since the outbreak began earlier this year -- caution is far more prevalent on Wall Street than enthusiasm. 

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U.S. equity futures suggest modest declines to start the Tuesday session, with contracts tied to the Dow Jones Industrial Average indicating a 290 point opening bell pullback and those linked to the S&P 500 guiding to a 37 point decline for the broader benchmark. 

With today's declines, Wall Street is still set for its worst opening-year quarter since 1987, with the S&P 500 down 18.7% for the year-to-date and the Dow some 7,000 points from its February 13 peak.

Global oil markets, too, were attempting a modest rebound from near 20-year lows in overnight trading after President Donald Trump said Monday he had asked Russian leader Vladimir Putin to arrange a meeting of the two countries' energy ministers to discuss ways to stabilize world crude prices.

Brent crude futures contracts for May delivery, the benchmark reference for around 60% of global crude purchases, were last seen 74 cents higher from their Monday closing price in New York and changing hands at $23.50 per barrel in early European trading.

WTI crude futures for May delivery, which are more tightly connected to domestic gas prices, were marked $1.17 higher at $21.23 per barrel, after briefly trading below $20 a barrel for the first time since February 2002 during the Monday session.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.41% higher on the session at 99.591 while benchmark 10-year U.S. Treasury notes were seen a few basis points lower at 0.685%. 

European stocks were also firmer at the start of trading in Frankfurt and London, with the Stoxx 600 regional benchmark rising 0.7% on the strength of energy and industrial stocks and Britain's FTSE 100 gaining 0.7% as oil, energy and basic resource stocks rallied on the stronger-than-expected China data, with gains limited by a stronger pound, which traded at 1.2349 against the U.S. dollar. 

Overnight in Asia, the region-wide MSCI ex-Japan index was marked 1.26% higher thanks to gains in China and Hong Kong, while Japan's Nikkei 225 closed 0.88% lower at 18,917.01 points.