Dow Futures Surge As Re-Opening Moves in Major Global Economies Offset US-China Tensions

With Japan lifting emergency orders in and around Tokyo, Germany recording a decline in new infections and Britain setting a date for retail re-openings, investors are hoping the worst of the global coronavirus pandemic has passed.

The Tuesday Market Minute

  • Global stocks surge as investors shrug-off U.S.-China tensions and focus on re-opening plans for the world's biggest economies.
  • Japan lifts emergency orders around Tokyo, while Britain says all retail stores can start trading on June 15. Germany is also set to ease travel restrictions in the coming days.
  • European stocks hit the highest levels in 11 weeks amid the global market rally, while stocks in Asia surge on re-opening optimism and fresh pledges of central bank support.
  • The dollar index slips lower amid renewed market optimism, while oil prices gain on hopes of accelerating crude demand. 
  • NYSE trading floor resumes limited operations Tuesday after closing for two months amid the peak of the coronavirus pandemic. 
  • U.S. equity futures surge, setting up the Dow for a chance to cross the 25,000 mark and adding 55 points to the S&P 500 ahead consumer confidence and new home sales data at 10:00 am Eastern time.

Wall Street futures surged higher Tuesday as markets shrugged off concerns over U.S.-China tensions and looked to improving coronavirus infection data, as well as the re-opening of major economies around the world, ...

With all 50 U.S. states now operating under some form of lockdown easing, and countries from Japan to the United Kingdom lifting stay-at-home orders and allowing stores and small business to re-opening, investors are betting that the worst of the pandemic, which has taken nearly 350,000 lives around the world, has passed.

U.S.-China tensions remain simmering, however, and White House National Security Adviser Robert O'Brien warned over the weekend that Beijing's attempt to impose new security restrictions on Hong Kong could result in sanctions from Washington is not far from the foreground in terms of market risk.

However, with central banks buying as much as $2.4 billion in financial assets every hour in order to support markets and stabilize the world's biggest economies -- including fresh pledges from China and Japan over the past two days -- investors appear content to ride the current equity market rally into what is expected to be a light week for corporate earnings news and economic data releases.

Futures contracts tied to the Dow Jones Industrial Average are indicating a 585 point opening bell gain, a move that would lift the 30-stock average to within a whisker of the 25,000 point mark.

Contracts tied to the S&P 500, meanwhile, suggest a 62 point gain that would lift the broader benchmark past the 3,000 point mark, as well as its 200-day moving average of 2,988 points.

Tuesday's market action will also be marked by the re-opening of the NYSE trading floor in lower Manhattan, which has been closed for the past two months, although only a small number of traders will return to the 228-year old Exchange and operate under strict COVID-19 guidelines. 

Oil prices, too, were getting a boost from the market's increased appetite for risk, with traders betting that demand for crude will continue to escalate as OPEC production cuts kick-in and economies continue to stoke factory output in the weeks ahead.

Brent crude contracts for July delivery, the global benchmark, were seen 85 cents higher at $36.38 per barrel while WTI contracts for the same month -- the new U.S. benchmark -- rose 62 cents to $34.34 per barrel.

The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, was marked 0.75% lower at 99.12 amid the buoyant market mood, while benchmark 10-year Treasury note yields edged higher, to 0.697%, in early European trading.

Those moves helped European stocks rise to an 11-week high Tuesday as investors tracked statements from U.K. Prime Minister Boris Johnson, who announced the re-opening of shops and small businesses around the country, and reports that Germany is ready to ease travel restrictions over the coming days.

The Stoxx 600 index, the regional benchmark, jumped 0.85% higher in early Tuesday trading, while Britain's FTSE 100 rose 1% to pass the 6,100 point mark. Germany's DAX performance index, meanwhile, was seen 0.9% higher at 11,489 points.

Overnight in Asia, Japan's Nikkei 225 surged 2.55% higher on the session to close at 21,271.17 points as Prime Minister Shinzo Abe moved to lift state of emergency restrictions in and around the city of Tokyo and Bank of Japan Governor Haruhiko Kuroda told lawmakers that the central bank could "come up with something new" to the support the economy if needed.

China stocks, too, were boosted by central bank pledges following an interview with PBOC Governor Yi Gang, who said the central bank would continue to support money supply growth and banking system liquidity as the economy weathers its worst recession on record. 

The region-wide MSCI ex-Japan benchmark was last seen 1.6% higher heading into the final hours of trading, thanks in part to solid gains in South Korea and Australia.