US Market
The major U.S. index futures are currently pointing to a lower open on Tuesday, with a Moody’s downgrade of several banks likely to weigh on the markets.
U.S. stocks closed on a firm note on Monday, recovering well after recent sharp losses, as investors looked ahead to more earnings updates and data on U.S. consumer and producer price inflation due later in the week.
The major averages all closed higher. The Dow settled at 35,473.13, gaining 407.51 points or 1.16 percent, the best return in about seven weeks.
The S&P 500 ended with a gain of 40.41 points or 0.9 percent at 4,518.44, while the Nasdaq climbed 85.16 points or 0.61 percent to 13,994.40.
The Dow, the S&P 500 and the Nasdaq had shed 1.1 percent, 2.9 percent and 2.3 percent, respectively, last week.
Amgen shares climbed about 4 percent. Boeing rallied nearly 3 percent, and Johnson & Johnson gained 2.5 percent.
Alphabet shares gained 2.7 percent, and Meta Platforms advanced 1.8 percent. United Health, Caterpillar, Nike, Walmart, McDonalds, IBM, Visa, P&G, Merck, American Express and Coca-Cola advanced 0.8 to 1.6 percent.
Berkshire Hathaway shares gained about 2.5 percent after the company reported record quarterly operating profit.
Apple Inc. shares drifted down 1.7 percent, continued to be weighed down by the drop in revenues in the latest quarter. The company’s earnings, however, beat analyst estimates.
U.S. Economic Reports
The Commerce Department released a report on Tuesday showing the U.S. trade deficit narrowed in the month of June.
The report said the trade deficit shrank to $65.5 billion in June from a revised $68.3 billion in May. Economists had expected the trade deficit to decrease to $65.0 billion from the $69.0 billion originally reported for the previous month.
The narrower trade deficit came as the value of imports slid by 1.0 percent to $313.0 billion, while the value of exports edged down by 0.1 percent to$247.5 billion.
At 10 am ET, the Commerce Department is scheduled to release a separate report on wholesale inventories in the month of June. Wholesale inventories are expected to decrease by 0.3 percent.
The Treasury Department is due to announce the results of this month’s auction of $42 billion worth of three-year notes at 1 pm ET.
Europe
European stocks were moving lower on Tuesday after data showed China’s exports and imports both sank at their fastest pace since the 2020 COVID-19 pandemic in July, threatening recovery prospects in the world’s second-largest economy.
Investors also awaited key inflation readings from the world’s largest economies due this week for more clues on the growth and rate outlook.
Meanwhile, Germany’s inflation eased as estimated in July but remained elevated on higher food and energy prices, final data from Destatis revealed.
The consumer price index rose 6.2 percent year-on-year, following a 6.4 percent increase in June. The statistical office confirmed the initial estimate published on July 28.
Elsewhere, France’s current account deficit narrowed in the second quarter driven by the improvement in foreign trade, the Bank of France reported.
The current account deficit fell sharply to EUR 0.5 billion from EUR 9.1 billion in the first quarter.
The pan European STOXX 600 dropped 0.3 percent to 458.34 after finishing marginally higher on Monday.
The German DAX, France’s CAC 40 and the U.K.’s FTSE 100 were down between 0.3 percent and half a percent.
Italian banks were coming under heavy selling pressure after the country approved a 40 percent windfall tax on banks’ extra profits to feed items such as a reduction of the tax wedge, tax cuts and financial support to holders of mortgages on first homes.
Intesa Sanpaolo slumped nearly 8 percent and UniCredit plummeted 6.4 percent.
Regional banks Commerzbank, Deutsche Bank and BNP Paribas lost 2-3 percent.
Miner Glencore tumbled 3.8 percent after half-year profit dropped 50 percent.
Anglo American dropped 1.8 percent and Antofagasta declined 1.2 percent on concerns over slowing growth in China.
Asset manager Abrdn plunged almost 8 percent after reporting a drop in its assets under management.
German drug and pesticide maker Bayer fell about 1 percent after reporting a net loss of 1.89 billion euros for the second quarter.
Denmark’s FLSmidth was marginally higher after lifting its FY23 outlook.
Asia
Asian stocks ended Tuesday’s session on a mixed note after the release of weak Chinese trade data and ahead of key inflation readings from the world’s largest economies due this week.
The dollar traded firm in Asian trade while oil and gold prices edged lower as investors awaited U.S. consumer price and producer inflation data that might influence the Fed’s plans for possible interest rate hikes.
Chinese and Hong Kong stocks fell after data showed China’s exports and imports both fell more than expected in July, threatening recovery prospects and adding to pressure on policymakers to unveil additional stimulus.
Chinese exports fell 14.5 percent from a year earlier in July, while imports tumbled 12.5 percent in a sign of weak overseas and domestic demand.
China’s Shanghai Composite index dropped 0.25 percent to 3,260.62 while Hong Kong’s Hang Seng plummeted 1.81 percent to 19,184.17.
Property developers were hit hard, with Longfor Properties and Country Garden Holdings plunging 5.6 percent and 13.6 percent, respectively after Moody’s flagged increased headwinds to the country’s property sector.
Chinese e-commerce giant Alibaba Group fell 2.7 percent ahead of its earnings release due on Thursday.
Japanese shares eked out modest gains despite wage growth and household spending data missing expectations.
The Nikkei average rose 0.38 percent to 32,377.29 while the broader Topix index ended 0.34 percent higher at 2,291.73.
Tech investor Softbank Group rose 1.5 percent after quarterly loss narrowed from last year. Sony Corp closed half a percent higher ahead of its earnings results due on Wednesday.
Seoul stocks fell for a fifth consecutive session after China’s disappointing trade data and amid apprehensions over additional rate hikes by the Federal Reserve.
The Kospi average slipped 0.26 percent to 2,573.98, dragged down by tech heavyweights.
Samsung Electronics fell 1.3 percent and SK Hynix lost 2.7 percent. Internet portal operator led losses to close 4.9 percent lower.
Australian markets ended on a flat note, with the benchmark S&P/ASX 200 ending with a positive bias at 7,311.10. The broader All Ordinaries index finished marginally lower at 7,519.70.
Commonwealth Bank of Australia, the country’s largest lender, rose 0.4 percent ahead of its fiscal 2023 earnings report, due Wednesday.
Across the Tasman Sea, New Zealand’s benchmark S&P/NZX-50 index settled 0.55 percent lower at 11,868.75.
Commodities
Crude oil futures are plunging $1.93 to $80.01 a barrel after slumping $0.88 to $81.94 a barrel on Monday. Meanwhile, after slipping $6.20 to $1,940.70 an ounce in the previous session, gold futures are falling $8.60 to $1,961.40 an ounce.
On the currency front, the U.S. dollar is trading at 143.02 yen compared to the 142.50 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0946 compared to yesterday’s $1.1002.