Tuesday August 2nd

2-08-2016

Wall Street set to edge lower as Japan unveils fiscal stimulus

U.S. stock index futures indicated a lower open Tuesday as investors focused on hefty falls in Europe's banking sector and a new fiscal stimulus package from Japan. In Europe, stocks were lower, dragged down by banking shares as worries about the health of the region's lenders continued to weigh on sentiment. Italian banks were the worst hit. Shares of BMPS were down nearly 9 percent and briefly suspended from trade. And Unicredit tanked and was briefly suspended from trade over concerns about its bad loan portfolio with investors worried it will need a larger-than-expected capital raise. In Asia, the Japanese cabinet approved 13.5 trillion yen ($132.04 billion) in fiscal measures with cash payouts to low-income earners and infrastructure spending. The yen, however, strengthened against the dollar after the announcement. "(Japanese) PM Abe is moving, with a strong parliamentary majority, to boost economic growth and inflation. In spite of the resounding lack of success thus far, the one major advantage that Japan has over the euro zone is in terms of its political landscape," analysts at Rabobank said in a note. "With just one governm nt and one centralized fiscal plan, 'Abenomics' may yet prove a success (we reiterate ....'may')." In Japan, the Nikkei 225 dropped 244.32 points, or 1.47 percent, to 16,391.45 ahead of the release of further details on Japan's hefty fiscal stimulus plan announced last week. In South Korea, the Kospi slipped 10.58 points, or 0.52 percent, to 2,019.03. Chinese mainland shares bucked the trend, closing higher, with the Shanghai composite adding 17.54 points, or 0.59 percent, to 2,970.92 and the Shenzhen composite closing up by 14.04 points, or 0.73 percent, at 1,926.69.Hong Kong markets didn't open on Tuesday, due to a typhoon warning issued by the Hong Kong Observatory. Back in the U.S., stocks closed mixed in choppy trade on Monday, the first day of the month, amid falling oil prices while investors digested economic data. On Tuesday, earnings are due from AIG, Electronic Arts, Etsy, and Fitbit, among others. Procter & Gamble, Pfizer and CVS Health all reporters before the bell. Investors also digested U.S. economic data, including personal income for June, which rose 0.2 percent. Economists polled by Reuters expected an increase of 0.3 percent. U.S. personal spending rose 0.4 percent. Investors will also receive new July vehicle sales data. Oil prices were higher on Tuesday after falling by up to 10 percent over the course of one week, but investors remained concerned about oversupply weighing on prices. U.S. West Texas Intermediate (WTI) crude rose 51 cents to $40.57 a barrel by 6:48 a.m. ET (1048 GMT), after dipping below $40 for the first time since April in the previous session. International Brent crude oil futures were trading at $42.80 per barrel, up 66 cents from their last close. Gold rose on Tuesday as European shares fell 1 percent and the dollar hit its lowest in over a month versus the euro, after last week's soft U.S. growth data dented expectations for a near-term interest rate hike. Spot gold was up 0.54 percent at $1,359.91 an ounce, while U.S. gold futures for December delivery were up $7.50 an ounce at $1,366.90.