U.S. stock futures held onto modest gains Tuesday, while the dollar edge modestly higher, as investors priced the impact of tame inflation data in the world's biggest economy and President Donald Trump's increasingly protectionist stance on trade and business activity.
Wall Street futures leaped higher from last night's closing levels, which saw markets slump on the back of steep losses for industrial heavyweights such as Boeing Co. (BA) and Caterpillar Co. (CAT) linked to planned import tariffs on steel and aluminium and the risk of retaliation by U.S. trading partners.
Contracts tied to the Dow Jones Industrial Average were marked 116 points to the upside in early European hours, indicating an opening bell gain of 141 points, while those linked to the broader S&P 500 were seen 13.25 points higher from Monday's closing levels. The tech-focused Nasdaq closed at a record high 7,588.32 points last night, after gaining 0.32% on the session and extending its year-to-date advance to just under 10%, more than double the 4% increase for the S&P 500 benchmark. It's priced for a 28.75 point gain.
"US markets continue to gradually recovery from the sharp sell off at the start of February, which at the time was triggered by fears over a faster pace of tightening from central banks," said Oanda strategist Craig Erlam. "While investors appear to be coming to terms with the idea of more rate hikes, some caution remains, especially as this has also come at a time when Donald Trump is threatening a trade war with countries that don't improve the terms of trade for the US."
The dollar index, a measure of the greenback's strength against a basket of six global currencies, slipped to 89.98, while benchmark 10-year U.S. Treasury yields fell to 2.84%, as consumer price data from the month of February showed inflation holding steady at 0.2% on the month, cementing last week's payroll report which showed 313,000 news jobs added to the economy but only a modest 0.1% bump in wages.
Global market sentiment, however, was hit by President Trump's decision to issue and Executive Order blocking the $117 billion hostile takeover of U.S. based Qualcomm Inc. (QCOM) by Singapore-based Broadcom Inc. (AVGO) on the grounds of national security.
"There is credible evidence that leads me to believe that Broadcom Ltd ... might take action that threatens to impair the national security of the United States," the White House said in a statement late Monday.
Qualcomm shares were marked 3.84% lower from their Monday close during pre-market trading, indicating an opening bell price of $60.40, the lowest since Nov. 2, just days before Broadcom's $70 a share bid was initially revealed on Nov. 6. Broadcom shares edged 0.56% higher and were indicated to open at $264.30 each.
Intel Corp. (INTC) , which has been linked to a potential play for Broadcom, was also active in pre-market, rising 1.69% to a year-to-date higher $52.39 each.
The move not only scuppers what would have been the biggest tech-sector deal in history, it also suggests that the sector itself may not be immune to unilateral decisions in Washington that could impair its ability to earn overseas revenues.
In Europe, the Stoxx 600 benchmark slipped 0.02% to 379.10 points as markets in France and Italy posted solid gains. Germany's export-focused DAX index, however, slipped 0.05% even as the euro traded near a one-week low of 1.2314.
Markets in Asia, however, managed to claw their way into decent Tuesday gains, with Japan's Nikkei 225 rising 0.66% to end the session at 21,068.10 points and the region-wide MSCI Asia ex-Japan index gaining 0.05% into the close of trading.
Global oil prices were also active, with prices falling for a second consecutive session as traders reacted to last night's sell-off in industrial stocks and data suggesting that U.S. output will remain near the 10 million barrel per day mark over the near term.
Brent crude contracts for May delivery, the global benchmark, were seen 17 cents lower from last night's close in New York and changing hands at $64.78 per barrel. WTI contracts for April were marked 13 cents lower at $61.23.