Tuesday March 8th

8-03-2016

Wall Street set to pause after 5-day win streak

U.S. stock index futures indicated a lower open on Tuesday as investors paused for breath after a recent rally and digested weaker-than-expected trade data from China. Dow futures held about 50 points lower after earlier falling more than 100 points. U.S. crude oil futures traded higher, above $38 a barrel, as of 8:04 a.m. ET. U.S. stocks closed mixed Monday, steadying after their first three-week rally of the year so far, as gains in energy stocks offset declines in technology. However, sentiment looked to have turned by Tuesday morning with Asian and European indexes posting losses ahead of the U.S. open. China's trade data overnight showed February exports falling 25.4 percent in U.S. dollar terms, while imports fell 13.8 percent, with both declines wider than expectations. The drop in exports was the largest on-year drop since 2009, according to Reuters. China shares eked out gains Tuesday but most Asian markets retraced some of their recent rally, while European mining stocks — with their heavy exposure to the world's second largest economy — were hit hard. Chinese markets ended higher, with the Shanghai composite closing up 2.57 points, or 0.1 percent, at 2,899.91 and the Shenzhen composite up 8.89 points, or 0.51 percent, at 1,750.53. Among other markets, Japan's benchmark Nikkei 225 closed down 128.17 points, or 0.76 percent, at 16,783.15, extending Monday's 0.6 percent drop. Back in the U.S., there are no major earnings releases but the National Federation of Independent Businesses (NFIB) released its business optimism index, which fell last month amid sales growth concerns and hurting profits due to capital spending and hiring plans. Traders will also be reacting to fresh comments from Federal Reserve members. Two key Fed officials said Monday they expect inflation to get closer to the central bank's target. In separate prepared remarks in Washington, neither Fed Vice Chairman Stanley Fischer nor Gov. Lael Brainard made direct reference to next week's meeting of the Federal Open Market Committee. But Brainard argued for patience in rate increases amid possible risks that inflation and U.S. economic activity will fall. The oil rally resumed on Tuesday after earlier sputtering as Kuwait said it would only agree to an output freeze if all major producers take part. Comments from Goldman Sachs analysts that poured cold water over the prospects for a sustained rally had also piled pressure on prices. Brent crude futures were up 55 cents at $41.43 a barrel at 7:52 a.m. ET (1352 GMT), after breaching the $40 mark on Monday for the first time in three months. The contract climbed by 5.5 percent in intraday trading in the previous session. It has gained about 50 percent since Jan. 20. U.S. West Texas Intermediate (WTI) futures were up 44 cents at $38.34 a barrel. Gold edged towards a 13-month high on Tuesday, supported by a weaker dollar and lower European shares after Chinese trade data fuelled concerns about the state of global demand. China's February exports slumped 25.4 percent from a year earlier while imports dropped by 13.8 percent. Spot gold rose 0.41 percent to $1,272.26 an ounce, within reach of Friday's peak of $1,279.60, its highest since Feb. 3 last year.