Tuesday June 11th

11-06-2019

Dow set to rise for a seventh day, futures up triple digits

U.S. stock index futures rose on Tuesday, boosted by gains in tech, as a resolution between Mexico and the U.S. to avoid tariffs and hopes of lower interest rates from the Federal Reserve lifted investor sentiment. Around 7:55 a.m. ET, Dow Jones Industrial Average futures indicated a gain of 124 points at the open. Futures of S&P 500 and Nasdaq 100 were also seen higher. Global stocks also rose after Chinese state news agency Xinhua said the country would let local governments use bonds to finance infrastructure projects. The Shanghai Composite jumped 2.6% overnight, while the Stoxx 600 index in Europe gained 0.9%. The Dow was poised to notch its seventh straight gain. That would mark the 30-stock index’s longest winning streak since May 2018, when it rose for eight straight days. Meanwhile, the S&P 500 is just 2.3% below an all-time high set earlier this year. Shares of big tech companies like Facebook and Apple rose more than 1% each before the bell. Amazon, Netflix and Alphabet also traded higher in the premarket. President Donald Trump said Sunday that a 5% levy all Mexican imports into the U.S. would be suspended indefinitely. He added he had “full confidence” in Mexico’s ability to crack down on immigration from Central America. Wall Street also got a lift from increasing expectations of lower rates from the Fed. Market expectations for lower rates by July sat around 78%, according to the CME Group’s FedWatch tool. Investors are also pricing in a 97.% chance of lower rates by December, according to FedWatch. These forecasts have been rising amid weakening U.S. economic data. Monthly jobs growth slowed to 75,000 in May, missing an estimate of 180,000. Meanwhile, manufacturing activity in the U.S. grew at its slowest pace since 2016. U.S. producer prices increased solidly for a second straight month in May, boosted by a surge in the cost of hotel accommodation and gains in a range of other services, pointing to a steady pickup in underlying inflation pressures. The Labor Department said on Tuesday producer prices excluding food, energy and trade services rose 0.4% last month, matching April’s gain. The so-called core PPI increased 2.3% in the 12 months through May after rising 2.2% in April. Shares in mainland China surged on Tuesday, as a signal of an infrastructure boost from Beijing outweighed comments from U.S. President Donald Trumpon the ongoing trade war between the two economic powerhouses. The Shanghai composite rose 2.58% to close at about 2,925.72 and the Shenzhen component jumped 3.74% to finish its trading day at 9,037.67. The Shenzhen component soared 3.708% to close at 1,538.23. The CSI 300, which tracks the largest companies on the mainland, also gained 3.01% to close at approximately 3,719.28. Over in Hong Kong, the Hang Seng index added 0.83%. Elsewhere, Japan’s Nikkei 225 close 0.33% higher to close at 21,204.28, while the Topix index added 0.54% to finish its trading day at 1,561.32. South Korea’s Kospi rose 0.59% to close at 2,111.81. Oil prices rose on Tuesday as firmer equities and expectations that OPEC and its allies will keep withholding supply countered concern about slowing economies and demand. Russia said on Monday it might support an extension of OPEC-led supply cuts that have been in place since January, while equities rose after China eased financing rules to stem an economic downturn, giving oil a lift. Brent crude, the global benchmark, rose 29 cents to $62.58 a barrel around 8:25 a.m. ET (1225 GMT). U.S. West Texas Intermediate was up 56 cents, or 1.1%, at $53.82. Gold fell to a one-week low on Tuesday as the United States halted its plans to impose tariffs on Mexico, boosting appetite for riskier assets like equities at the expense of alternatives like bullion. Spot gold was down 0.4% at $1,322.39 per ounce, having earlier hit its lowest since June 4 at $1,320.75. U.S. gold futures fell 0.2% to $1,326.1 an ounce.