The Tuesday Market Minute
- Global stocks mixed as Wall Street's vaccine-driven rally fades, with European stocks giving back gains amid rising U.S.-China tension.
- President Trump threatens to permanently withhold WHO funding, accusing the body of being influenced by China, as Beijing calls his handling of the coronavirus outbreak 'incompetent'.
- European equities fade alongside U.S. futures ahead of Congressional testimony from Fed Chair Powell and Treasury Secretary Mnuchin later today in Washington.
- Oil prices extend gains as June WTI contract expiry goes smoothly and demand hopes continue to fuel a global commodity rally.
- U.S. equity futures suggest a weaker open on Wall Street ahead of housing starts and building permits data for April at 8:30 am Eastern time and before-the-bell earnings from Walmart and Home Depot.
U.S. stock futures sputtered Tuesday, following last night's rally that lifted Wall Street to its best session in five weeks, as investors focus on renewed tensions between Washington and Beijing.
However, a much stronger-than-expected first-quarter earnings report from Walmart (WMT) - Get Report, which included a staggering $134.6 billion in overall sales, lifted shares in the world's biggest retailer and helped add around 25 points to the Dow Jones Industrial Average.
President Donald Trump said late Monday that he was prepared to permanently withdraw funding from the World Health Organization unless the agency demonstrates independence from China. Trump accused the health body of promoting "disinformation" on the pandemic from Beijing just as President Xi Xinping unveiled plans for a $2 billion fund to help find a global COVID-19 vaccine.
China's Foreign Ministry spokesperson, Zhoa Lijian, hit back at the President, telling reporters in Beijing that Trump's moves were an attempt to distract the public from his 'incompetent' handling of the crisis.
With reports that the Nasdaq will seek to tighten listing requirements for China-based stocks, and the Commerce Department intensifying its blacklisting of tech giant Huawei, signs are mounting that the U.S.-China trade agreement could be at risk, raising questions over the pace and scope of any global economic recovery.
Wall Street futures look set for a modest pullback from last night's rally, which was accelerated by the news that Moderna Inc. (MRNA) - Get Report reported positive results from phase 1 data in its coronavirus vaccine study, although oil prices continue to rise on demand hopes and bond yields and the dollar are still indicating a bullish tone outside of equity markets.
Contracts tied to the Dow Jones Industrial Average suggest a 60 point opening bell decline, while those linked to the S&P 500 are indicating a modest 4 point decline for the broader benchmark.
S&P 500 companies are on pace to see a 12.1% decline in first-quarter profits, according to data from Refinitiv, a figure that is likely to balloon to around -42% over the three months ending in June.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.25% lower at 99.418 while benchmark 10-year Treasury note yields, which spiked yesterday amid the 800-point Dow rally, were holding at 0.706%.
Federal Reserve Chairman Jerome Powell, as well as Treasury Secretary Steven Mnuchin, will appear via videoconference before the Senate Banking Committee at 10:00 A.M. Eastern time to take questions the government's $2 trillion coronavirus rescue package.
Oil held onto gains, as well, heading into the Tuesday session that will see the expiry of June delivery contracts for WTI crude and domestic crude stock data later today from the American Petroleum Institute.
Brent crude contracts for July delivery, the global benchmark, were seen 14 cents higher at $34.99 per barrel while WTI contracts for the same month -- the new U.S. benchmark -- edged 20 cents higher to $31.85 per barrel.
European stocks, which were earlier boosted by news of a potential €500 billion ($565 billion) rescue package built on European Commission borrowing, slipped lower by mid-morning trade after data showing a 70% collapse in region car sales and 2.1 million new jobs lost over the month of April in the United Kingdom.
The Stoxx 600 benchmark was seen 0.73% lower on the day, pulling its year-to-date decline to 18.5%, while the FTSE 100 in London slipped 0.5%.
Overnight in Asia, Wall Street's surge washed over into regional stocks, despite the rhetorical back-and-forth between Trump and Xi, with the Nikkei 225 rising 1.5% on the session to close at 20,433.45 points and the MSCI ex-Japan index rising 1.74% heading into the close of trading.