Monday August 19th

19-08-2019

Dow set to jump 300 points as Wall Street continues rebound from August sell-off

U.S. stock index futures pointed to a higher open on Monday as Treasury yields rebounded, quelling fears of a possible recession. Futures also got a boost after the U.S. agreed to extend a temporary reprieve to Chinese telecom giant Huawei. Around 9 a.m. ET, Dow Jones Industrial Average futures indicated a gain of about 309 points. Futures on the S&P 500 and Nasdaq 100 were also solidly higher. These gains add to a rebound that started last week after the Dow posted its worst session of 2019. The 30-stock index plummeted 800 points, or 3.1% on Wednesday before regaining some of the lost ground on Thursday and Friday. The S&P 500 is still down 3% in August and off more than 4% from a recent record. The benchmark 10-year Treasury yields jumped to about 1.61% from around 1.54%. Bank shares rose along with yields. Bank of America traded 2% higher in the premarket while Citigroup advanced 1.9%. J.P. Morgan Chase climbed 1.8%. Last week the yield fell to its lowest level in more than three years and briefly traded below its 2-year counterpart. This is referred to as a yield-curve inversion and is seen by traders as a potential signal that a recession may be on the horizon. President Donald Trump said Sunday he doesn’t see a recession on the horizon in the U.S. after a volatile week for markets. “I don’t think we’re having a recession,” Trump told reporters. “We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money.” Fears of a recession come as the U.S. and China engage each other in a trade war. Over the past year, the two countries have slapped tariffs on billions of dollars worth of their goods. The U.S. has also targeted Huawei in the trade war, making it more difficult for U.S. companies to do business with the Chinese telecom. However, The Wall Street Journal and Reuters reported the Commerce Department was preparing to extend a license for 90 days, which will allow Huawei to continue business with the U.S. companies to service existing customers. The current agreement is set to end on Monday. Shares of chipmakers rose on the reports. On Semiconductor and AMD climbed more than 2% each while Micron Technology gained 1.9% in the premarket. The VanEck Vectors Semiconductor ETF (SMH) advanced 1.4%. Futures also rose after the Chinese central bank unveiled new measures to further reduce the real interest rate for companies in China in an effort to support slower economic growth. Stocks in Asia rose on Monday as U.S. Treasury yields bounced higher after plunging last week. Shares in mainland China led gains in the region as they surged on the day, with the Shanghai composite adding 2.1% to 2,883.10 and the Shenzhen component gaining 2.96% to 9,328.97. The Shenzhen composite also advanced 3.048% to 1,571.97. Hong Kong’s Hang Seng index also jumped 2.4%. In Japan, the Nikkei 225 rose 0.71% to close at 20,563.16, while the Topix added 0.61% to finish its trading day at 1,494.33. Meanwhile, South Korea’s Kospi advanced 0.66% to close at 1,939.90. Crude oil prices rose on Monday following a weekend attack on a Saudi oil facility by Yemeni separatists and as traders looked for signs of progress in U.S.-China trade negotiations. Price gains were, however, capped to some degree by an unusually downbeat OPEC report that stoked concerns about growth in oil demand. Brent crude, the international benchmark for oil prices, was up 84 cents, or about 1.4%, at $59.49 a barrel. U.S. West Texas Intermediate (WTI) crude futures were up 93 cents, or 1.7%, at $55.80 a barrel. Gold shed 1% on Monday as a recovery in share markets and rising U.S. Treasury yields reduced some of the metal’s safe-haven appeal, prompting investors to book profits. Spot gold was down 0.9% at $1,500.10 per ounce. U.S. gold futures slipped 0.8% to $1,511.80.