Tech Stocks May Lead The Way Back To The Upside

Tech Stocks May Lead The Way Back To The Upside

The major U.S. index futures are pointing to a higher opening on Tuesday following the weakness seen in the previous session. Tech stocks may regain ground following yesterday’s sell-off.

Following the mixed performance seen last week, stocks moved mostly lower during trading on Monday. The tech-heavy Nasdaq showed a particularly steep decline.

The major averages all ended the day in negative territory. While the Nasdaq plunged by 56.33 points or 0.9 percent to 6,470.59, the Dow dipped by 53.84 points or 0.2 percent to 22,296.09 and the S&P 500 slipped 5.56 points or 0.2 percent to 2,496.66.

The weakness on Wall Street came amid geopolitical concerns after North Korean Foreign Minister Ri Yong Ho claimed recent comments by President Donald Trump represent a “declaration of war.”

“Last weekend, Trump claimed that our leadership wouldn’t be around much longer, and hence, at last, he declared war on our country,” Ri said.

He added, “Given the fact that this comes from someone that is currently holding the seat of the United States presidency, this is clearly a declaration of war.”

Traders were also digesting the results of the election in Germany over the weekend. German Chancellor Angela Merkel won a fourth term in office but will have to govern with a far less stable coalition.

Internet, semiconductor and software stocks turned in some of the market’s worst performances, contributing to the steep drop by the Nasdaq.

Steel, networking, and telecom stocks also moved to the downside, while energy and gold stocks moved higher amid an increase in their respective commodities prices.

Commodity, Currency Markets

Crude oil futures are falling $0.32 to $51.90 a barrel after spiking $1.56 to $52.22 a barrel on Monday. Meanwhile, after climbing $14 to $1,311.50 an ounce in the previous session, gold futures are sliding $6.50 to $1,305 an ounce.

On the currency front, the U.S. dollar is trading at 111.99 yen compared to the 111.73 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued $1.1787 compared to yesterday’s $1.1848.

Asia

Asian stocks fell broadly on Tuesday as investors adopted a cautious stance amid heightened tensions surrounding the Korean Peninsula.

North Korea’s top diplomat said on Monday that a weekend tweet by U.S. President Donald Trump counted as a declaration of war and North Korea has the right to take countermeasures, including shooting down U.S. bombers, even in international space.

Chinese stocks closed slightly higher after three days of losses. The benchmark Shanghai Composite index edged up 2.03 points or 0.06 percent to 3,343.58, led by gains in property developers and resource stocks. Hong Kong’s Hang Seng index was marginally higher at 27,516 in late trade.

Japanese shares slipped from a two-year high as a stronger yen weighed on exporters and tech stocks also moved lower, tracking losses among their U.S. peers overnight.

The Nikkei average fell by 67.39 points or 0.33 percent to 20,330.19 while the broader Topix index closed marginally lower at 1,672.74. Advantest, Tokyo Electron and Murata Manufacturing declined 2-3 percent.

Prime Minister Shinzo Abe said at a news conference Monday that he will dissolve the lower house of parliament on Thursday and call a snap election for next month.

The minutes from the Bank of Japan’s July monetary policy committee meeting showed that policymakers like to stick with their current policy framework despite the recent developments in consumer inflation being relatively weak. Overseas economies are growing steadily, leading to a bump in exports, the minutes added.

South Korea’s Kospi average fell 6.08 points or 0.26 percent to 2,374.32, with tech stocks coming under heavy selling pressure after reports that Apple suppliers were asked to scale back shipments of parts for its upcoming iPhone X.

Market heavyweight Samsung Electronics fell 3.7 percent, rival LG Electronics tumbled 3 percent and chipmaker SK Hynix lost nearly 5 percent.

Australian shares ended lower even as energy stocks rallied after oil prices jumped to their highest for more than two years on Monday. The benchmark S&P/ASX200 and the broader All Ordinaries index both dropped around 0.2 percent to end at 5,671 and 5,729.60, respectively.

Miners BHP Billiton and Fortescue Metals Group shed 1-2 percent while banks ANZ and Commonwealth and ended down half a percent and 0.9 percent, respectively. Oil Search, Santos and Woodside Petroleum jumped around 3 percent after oil prices rose more than 3 percent on Monday as Turkey threatened to shut down Kurdish crude shipments through its territory.

Australia’s consumer confidence dropped slightly during the week ended September 24, after strengthening in the previous week, a weekly survey compiled by the ANZ bank and Roy Morgan Research showed. The consumer confidence index fell to 114.1 from 114.8 in the preceding week, driven by a solid decline in views towards future economic conditions.

Europe

European stocks were mostly higher on Tuesday, although escalating verbal exchanges between the U.S. and North Korea kept underlying sentiment somewhat cautious.

Fed Chair Janet Yellen will deliver a speech on the topic of “Inflation, Uncertainty, and Monetary Policy” later today, with investors looking for clues on whether the Fed will hike rates in December.

Meanwhile, on a light day on the economic front, survey data from statistical office Insee showed that France’s manufacturing confidence weakened slightly in September.

The business confidence index among manufacturers fell to 110 from 111 in August. Economists forecast the reading to remain unchanged at 111.0.

The pan-European Stoxx Europe 600 index was up 0.2 percent at 384.46 in late opening deals after rising 0.2 percent the previous day.

The German DAX was moving up 0.3 percent and France’s CAC 40 index was rising 0.1 percent while the U.K.’s FTSE 100 was marginally lower due to concerns over pound strength.

The pound hit its highest level since July against the euro following the inconclusive election result in Germany.

German utility RWE rose over 1 percent after launching a tender offer for hybrid bonds.

Similarly, real estate firm Deutsche Wohnen jumped more than 4 percent after launching a new convertible bond offering of 800 million euros due 2026.

Swiss food company Nestle rallied 1.5 percent after confirming its mid-single digit organic growth target by 2020.

EasyJet shares rallied nearly 2 percent. Insolvent airline Air Berlin said it expects to conclude talks with EasyJet and Lufthansa about a possible sale by the middle of next month.

British banks were broadly lower after the Bank of England warned that U.K. banks are underestimating risks from a surge in consumer borrowing. Lloyds Banking Group lost 1.5 percent and Barclays shed 0.6 percent.

Travel firm Thomas Cook Group fell over 1 percent after replacing its CFO.

Swiss engineering group ABB was marginally lower after announcing a supply and technology partnership with Northvolt.

U.S. Economic Reports

At 10 am ET, the Commerce Department is scheduled to release its report on new home sales in the month of August. New home sales are expected to jump by 3.3 percent.

The Conference Board is also due to release its report on consumer confidence in the month of September at 10 am ET. The consumer confidence index is expected to drop to 120.2.

At 12:45 pm ET, Federal Reserve Chair Janet Yellen is scheduled to deliver the keynote address at the NABE Annual Meeting to Assess Prospects for Growth in Shifting Global Economy.

The Treasury Department is due to announce the results of its auction of $26 billion worth of two-year notes at 1 pm ET.

by RTT Staff Writer

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