Tuesday June 23rd

23-06-2020

Dow futures jump 300 points, recovering from overnight losses following China trade deal scare

U.S. stock index futures recovered from earlier losses to trade higher early Tuesday after White House trade advisor Peter Navarro clarified that the U.S.-China trade deal is not over. Dow Jones Industrial Average futures were up 330 points, or 1.3%, implying an opening gain of 387 points. S&P 500 and Nasdaq-100 futures traded higher by 1.1% and 0.7%, respectively. “My comments have been taken wildly out of context,” Navarro said in a statement. “They had nothing at all to do with the Phase I trade deal, which continues in place.” Earlier in the session, Dow futures had dropped about 400 points. Futures plunged after Navarro’s Monday interview on Fox News’ “The Story.” Fox’s Martha MacCallum asked, “Do you think that the president sort of ... I mean, he obviously really wanted to hang onto this trade deal as much as possible. And he wanted them to make good on the promises because there had been progress made on that trade deal, but given everything that’s happened and all the things you just listed, is that over?” “It’s over. Yes,” Navarro responded. In his subsequent statement, Navarro said, ” I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world.” In his interview with Fox, Navarro said “the turning point” came when the U.S. heard about the coronavirus outbreak in China. Navarro claimed that the administration only heard about the virus after the trade deal between Washington and Beijing was signed on Jan. 15. Apple was among the best-performing stocks in the premarket, gaining 1.7%. That advance put the tech giant on pace to hit a fresh record high at the open. Bank stocks rose broadly. JPMorgan Chase, Citigroup, Wells Fargo and Bank of America all gained more than 2%. Retailers such as Gap, Kohl’s and Nordstrom — which are directly linked to the economy reopening — were all up at least 2%. MGM and Wynn Resorts gained more than 2% each. On Monday, the Dow Jones Industrial Average rose 153 points, or 0.6%. The S&P 500 also registered a gain, climbing 0.7%. The Nasdaq Composite was the outperformer, rising more than 1%, thank to help from mega-cap technology companies. The close marks a record close of the technology-heavy index, its 20th of the year. Shares of Apple ticked up 2.6% and shares of Microsoft rose nearly 3%. While stocks started the week on a strong foot, it came under thin trading. The SPDR S&P 500 ETF Trust (SPY), which tracks the broader market index, traded more than 67 million shares on Monday. That’s well below the ETF’s 30-day volume average of 105.01 million.  “The message today may be that the virus and the bull market can coexist,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “Despite back to back days of Covid19 cases above 30,000 over the weekend and ongoing reports of hot spots, the stock market managed to post a strong gain.  Market action seems to suggests that investors expect the economy to continue improving in the months ahead even though the country is likely to experience spotty or temporary spikes in the virus.” The major U.S. stock averages are coming off their fourth weekly gain in five weeks. New home sales data from May will be released on Tuesday morning. Stocks in Asia Pacific were higher on Tuesday following a turbulent session as White House advisor Peter Navarro clarified that the U.S.-China trade deal is not over. Hong Kong’s Hang Seng index led gains among the region’s major markets as it rose 1.62% to close at 24,907.34. Mainland Chinese stocks were higher on the day, with the Shanghai composite up 0.18% to around 2,970.62 while the Shenzhen component rose 0.782% to about 11,794.01. In Japan, the Nikkei 225 rose 0.5% to close at 22,549.05 while the Topix index added 0.51% to finish its trading day at 1,587.14. South Korea’s Kospi also gained 0.21% to close at 2,131.24. Oil prices rose on Tuesday after a volatile session sparked by confusion over the status of the U.S.-China trade deal. Brent crude rose 80 cents, or 1.86%, to $43.88 a barrel, having skidded to a session low of $42.21. West Texas Intermediate was up 81 cents, or 2%, at $41.55 a barrel after touching a low of $39.76. Gold eased on Tuesday on expectations of positive manufacturing data from the euro zone, but concerns over a second coronavirus wave kept the safe haven metal near its highest level in more than a month. Spot gold was down 0.2% at $1,750.75 per ounce by 0324 GMT after hitting its highest since May 18 at $1,762.84 on Monday. U.S. gold futures eased 0.2% to $1,763.70.