Tuesday February 13th


Dow futures fall more than 80 points as wild market swings continue

U.S. stock index futures fell ahead of Tuesday's open, pulling back from the sharp gains posted in the previous trading session. Around 8 a.m. ET, Dow futures were down 93 points, indicating a drop of around 79 points at the open. The Nasdaq and S&P 500 futures also indicated a negative start to Tuesday's trade. The movements seen in U.S. futures come on the back of a strong finish Monday, when the Dow Jones industrial average closing up more than 400 points. The Nasdaq composite and S&P 500 also surged. Markets have been on edge over the past week due to the likelihood of higher interest rates. While last Friday saw trade close higher, all three major indexes ended the week more than 5 percent down, with the Dow delivering its worst performance since January 2016. Consequently, investors are paying close attention to the bond market, in relation to interest rates, with yields dropping during Tuesday's morning trade. In central banking news, Cleveland Federal Reserve President Loretta Mester is expected to comment on monetary policy and its outlook at the Dayton Area Chamber of Commerce's government affairs breakfast in Dayton, Ohio. President Donald Trump unveiled the country's latest budget Monday, with the White House calling for $3 trillion in deficit reduction, which would include $1.7 trillion in mandatory spending cuts, while proposing to cut discretionary spending by 2 percent a year after 2019. The program also calls for cuts to programs like Medicare, in addition to an increase in military spending and funding for Trump's proposed wall along the Mexican border. Congress, however, will ultimately decide when it comes to setting spending levels. On the data front, the National Federation of Independent Business' small business optimism index rose to near record levels in January, with business owners showing concerns about the inability to find qualified workers. Most Asian markets closed higher on Tuesday, after stateside indexes recorded their second day of gains following last week's losses. Japan's benchmark Nikkei 225, however, reversed early gains to closed down 0.65 percent, or 137.94 points, at 21,244.68 as markets resumed trade following a long weekend. Across the Korean Strait, the Kospi advanced 0.41 percent to finish the day at 2,395.19. Greater China markets were also buoyant. Hong Kong's Hang Seng Index rose 1.54 percent by 3:14 p.m. HK/SIN as markets clawed back gains after falling into correction territory last week. On the mainland, the Shanghai composite tacked on 1 percent to close at 3,185.6 and the Shenzhen composite gained 0.41 percent to end at 1,730.83. The blue chip CSI 300 index finished the day higher by 1.19 percent. Oil prices dipped on Tuesday after a forecasting agency estimated world crude supply could overtake demand this year, potentially undermining producer efforts to curb supply. The Paris-based International Energy Agency raised its forecast for oil demand growth in 2018 to 1.4 million barrels per day, from a previous projection of 1.3 million bpd. However, rapidly rising output, particularly in the United States, could well outweigh any pick-up in demand and begin to push up global oil inventories, which are now within sight of their five-year average. Gold rose for a second day on Tuesday as the dollar slipped in the face of a recovery in global equities, which dampened appetite for the U.S. currency as a safe store of value. A retreat in the dollar, in which the precious metal is priced, has helped gold to pull back nearly 2 percent from last week's one-month low of $1,306.81 an ounce. Spot gold was up 0.2 percent at $1,325.47 by 9:03 a.m. EST, while U.S. gold futures for April delivery were 0.11 percent higher at $1,327.70. "Today, having cut costs dramatically, U.S. producers are enjoying a second wave of growth so extraordinary that in 2018 their increase in liquids production could equal global demand growth," the IEA said. Brent crude futures were down 39 cents at $62.20 a barrel by 8:54 a.m. ET (1353 GMT), while U.S. West Texas Intermediate (WTI) crude futuresfell 59 cents, or 1 percent, to $58.70 a barrel.