The Tuesday Market Minute
- Global stocks mixed as markets react to President Trump’s return to the White House from Walter Reed Medical Center.
- Trump told reporters he was ‘feeling good’ following three days of treatment for his coronavirus infection, but doctors warned that the worst of his symptoms could still surface.
- Treasury Secretary Mnuchin and House Speaker Pelosi set to resume stimulus talks Tuesday, but the infection of three GOP Senators with COVID-19 could delay ultimate vote for fresh fiscal support
- Federal Reserve Chairman Jerome Powell speaks at 10:40 am Eastern time, with key central bank address from ECB and BoJ officials slated to follow Tuesday.
- U.S. equity futures suggest a softer open on Wall Street ahead of redbook retail sales data at 8:55 am Eastern time and Powell’s webcast speech at 10:40 am Eastern time.
U.S. equity futures drifted lower Tuesday, while benchmark Treasury bond yields held at higher levels after a breakout move on Monday, as markets reacted to President Donald Trump’s return to the White House following three days of treatment for his coronavirus infection at Walter Reed Medical Center.
Trump, whose positive test was determined on Thursday, told reporters in Washington he was feeling ‘good’ upon his return to the White House, although doctors cautioned that the worst of the disease’s symptoms could flare up later this week.
Still, the apparent stabilization of the President’s health, as well as reported progress in stimulus talks between House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin, put a floor under U.S. stocks in overnight trading after indices hit a two-week high after Monday’s sharp rally.
Tuesday’s early trading is likely to focus on the both the impact of the resurging virus on major economies around the world, as well as central bank plans to alleviate it, with three keynote speeches slated throughout the session.
Federal Reserve Chairman Jerome Powell will top the list, with a 10:40 am Eastern time address to the National Association for Business Economics, which comes at a time of increasing concern for not only the U.S. recovery, which is facing major wave of job losses and spending slowdowns in the coming months, but also in financial markets, where a surge in government borrowing has pressured primary dealers and lifted market interest rates.
U.S. equity futures, however, suggest only modest moves at the opening bell, with contracts tied to the Dow Jones Industrial Average priced for a 65 point dip and those linked to the S&P 500, which is up 5.5% for the year, set for an 11 point retreat.
Benchmark 10-year Treasury note yields were last seen at 0.762% in overnight trading, while the U.S. dollar index was marked 0.1% lower at 94.436 against a basket of six global currencies.
European stocks were also weaker, but were largely tracking U.S. futures in the early trading session, even after a stronger-than-expected reading of German industrial orders for the month of August underscored the improving business and investor sentiment in the region’s biggest economy.
The Stoxx 600 benchmark slipped 0.24% in the opening hours of trading in Frankfurt, while Germany’ DAX performance index was little-changed from last night’s close and London’s FTSE 100 was marked 0.4% to the downside in early London dealing.
Global oil prices were modestly higher, in part due to weakness in the U.S. dollar, after yesterday’s soaring rally that lifted crude prices by more than 5% alongside the market’s broader upside moves linked to President Trump’s improving health and the prospect of more fiscal stimulus from Washington.
WTI contracts for November delivery, the new U.S. benchmark, traded 38 cents higher from their Monday close in New York to change hands at $39.60 per barrel while Brent contracts for December, the global benchmark, were seen 41 cents higher $41.70 per barrel.
Overnight in Asia, President Trump’s exit from the Walter Reed Medical Center in Bethesda, as well as last night’s triple-digit rally on Wall Street, boosted regional stocks and lifted the Nikkei 225 in Tokyo to a 0.52% gain on the session, while quite markets in China, linked to that country’s national holiday celebrations kept gain for the MSCI ex-Japan benchmark in check even as it rose 0.76% heading into the close of trading.