Tuesday April 26th

26-04-2016

Futures higher; earnings, data in focus

U.S. stock index futures traded higher on Tuesday, amid a busy day for earnings and the start of a Federal Reserve policy meeting. Companies that posted quarterly results included 3M, Eli Lilly, Fiat Chrysler and Lockheed Martin. Apple will post earnings on Tuesday after Wall Street closes, along with AT&T, eBay and Twitter. Earlier in the day, oil major BP reported a pretax loss of $865 million for the first quarter of 2016. The U.S. Federal Open Market Committee (FOMC) will start its two-day meeting on Tuesday. It is not expected to raise interest rates, but may signal the possibility of doing so in June. "The recent drift higher in 10-year Treasury yields (to 1.9 percent) and in breakeven rates (to 1.66 percent) just might prompt a marginally less dovish message than in March; a possibility which will probably give markets a slightly risk-off sense today," Kit Juckes, a strategist at Societe Generale, said in a note on Tuesday. In economic news, durable goods orders rose a less-than-expected 0.8 percent in March after a downwardly revised 3.1 percent decline in February. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, were unchanged after a downwardly revised 2.7 percent decline in the prior month. These so-called core capital goods orders were previously reported to have decreased 2.5 percent in February, Reuters said. Other data scheduled for release include the Case-Shiller 20-city index and the consumer confidence index for April. Crude futures rose on Tuesday, helped by the weaker dollar. Saudi Arabia, OPEC's de facto leader, announced a plan on Monday to diversify its economy away from oil production. Front-month Brent crude futures traded at $45.01 per barrel at 7:06 a.m. ET (1106 GMT), up 53 cents from their last settlement. U.S. crude futures were also up 50 cents, at $43.14 a barrel. "Market fundamentals continue to suggest that the combination of robust demand and weak supply growth will move global oil markets closer into balance by the end of the year," BP Chief Executive Bob Dudley said in a statement after the firm reported stronger-than-expected results. A weaker dollar and a rush of new investment into crude futures also supported crude prices. Asia stocks finished mixed on Tuesday as investors took to the sidelines ahead of major central bank monetary policy decisions due later in the week. Australia's ASX 200 fell 15.76 points, or 0.3 percent, to 5,220.60, led by declines in the energy and materials sub-indexes. Japan's Nikkei 225 was off 86.02 points, or 0.49 percent, to 17,353.28. Chinese mainland markets finished higher, with the Shanghai composite gaining 18.72 points, or 0.64 percent, to 2,965.39, and the Shenzhen composite added 22.08 points, or 1.18 percent, to 1,881.98. Gold retreated on Tuesday as a rebound in assets viewed as higher risk, such as oil and stocks, diverted some attention from the metal, though prices remained hemmed into a narrow range ahead of a U.S. Federal Reserve policy meeting. The Fed is expected to hold interest rates steady at the meeting starting on Tuesday, but traders will be watching for changes to its assessement of the U.S. economy, which could point to more rate increases later in the year. Spot gold was down 0.3 percent at $1,234.20 an ounce, while U.S. gold futures for June delivery were down $4.30 at $1,235.90.