Looming Trump Decision On Iran Deal May Weigh On Wall Street

Looming Trump Decision On Iran Deal May Weigh On Wall Street

The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks likely to give back ground after ending the previous session mostly higher.

Geopolitical concerns may weigh on the markets ahead of President Donald Trump’s announcement of his decision on the Iran nuclear deal.

Trump is widely expected to withdraw from the agreement, which lifted sanctions on Iran in exchange for limits on the country’s nuclear program.

Overall trading activity may be somewhat subdued, however, as a lack of major U.S. economic data may keep some traders on the sidelines.

After an early move to the upside, stocks gave back ground in afternoon trading on Monday but managed to end the day higher. With the gains on the day, the major averages extended the rally seen in the previous session.

The Dow rose 94.81 points or 0.4 percent to 24,357.32, the Nasdaq advanced 55.60 points or 0.8 percent to 7,265.23 and the S&P 500 climbed 9.21 points or 0.4 percent to 2,672.63.

Stocks initially continued to benefit from the upward momentum seen last Friday in response to the Labor Department’s monthly jobs report.

While the report showed weaker than expected job growth in the month of April, the unemployment rate fell to its lowest level since 2000.

The jobs report reinforced expectations that the Federal Reserve will raise interest rates next month, although subdued wage growth has led traders to believe the Fed will not increase rates too aggressively.

The pullback seen in afternoon trading came as President Donald Trump announced via Twitter that he will reveal his decision on the Iran nuclear deal on Tuesday.

Computer hardware, biotechnology and brokerage stocks saw significant strength on the day, while telecom and tobacco stocks showed notable moves to the downside.

Commodity, Currency Markets

Crude oil futures are falling $0.64 to $70.09 a barrel after jumping $1.01 to $70.73 a barrel on Monday. Meanwhile, after slipping $0.60 to $1,314.10 an ounce in the previous session, gold futures are dropping $2.40 to $1,311.70 an ounce.

On the currency front, the U.S. dollar is trading at 109.07 yen compared to the 109.09 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1872 compared to yesterday’s $1.1922.

Asia

Asian stocks ended mostly higher on Tuesday as Chinese trade data topped forecasts and investors awaited an announcement by President Donald Trump on whether he will withdraw from the nuclear deal with Iran.

China’s Shanghai Composite Index climbed 24.95 points or 0.8 percent to 3,161.60 after the release of upbeat trade figures for April. Hong Kong’s Hang Seng Index surged up 408.55 points or 1.4 percent to 30,402.81.

Chinese exports climbed 12.9 percent year-over-year in April, well above the expected rise of 6.8 percent. Imports spiked 21.5 percent from a year ago, exceeding economists’ forecast for an increase of 15.9 percent. The trade surplus totaled $28.8 billion in April versus the expected surplus of $25.7 billion.

Japanese shares recovered from a weak start to end modestly higher, led by banks and drug makers. The benchmark Nikkei 225 Index gained 41.53 points or 0.2 percent to end at 22,508.69, while the broader Topix Index closed 0.4 percent higher at 1,779.82.

Lender Mitsubishi UFJ Financial rose 0.9 percent, Sumitomo Mitsui Financial inched up 0.4 percent and Mizuho Financial Group gained 0.6 percent. Takeda Pharmaceutical Company soared 4 percent ahead of its announcement to buy larger rival Shire for $62.42 billion.

On the data front, average household spending in Japan fell 0.7 percent year-on-year in March, the Ministry of Internal Affairs and Communications said, coming in at 301,230 yen. That missed forecasts for an increase of 1.1 percent.

Australian shares ended marginally higher, led by financials as Australia and New Zealand Banking Group flagged the likelihood of an additional buyback of shares to the tune of $1 billion-$1.5 billion.

Investors also waited for the release of the annual budget amid expectations the government will announce hefty health and infrastructure spending and deliver tax cuts targeting lower and middle-income earners.

Meanwhile, market participants shrugged off soft retail sales figures for March. Retail sales remained flat in March, defying economists’ forecast for an increase.

The benchmark S&P/ASX 200 Index inched up 7.40 points or 0.1 percent to 6,091.90, while the broader All Ordinaries Index ended 7.60 points higher at 6,183.20.

ANZ shares rose over 1 percent, Commonwealth advanced 1.1 percent and Westpac added 1.3 percent. Investment bank Macquarie Group rallied 1.7 percent to extend gains for the fourth straight session.

Healthscope jumped 3.3 percent after Canada’s NorthWest Healthcare Properties REIT said it has taken a 10 percent interest in the company. Biotherapeutics company CSL climbed 1.5 percent.

Meanwhile, Beach Energy, Origin Energy, Woodside Petroleum and Santos dropped 1-2 percent as oil prices retreated from three-and-a-half-year highs ahead of Trump’s decision on Iran.

Europe

European stocks are mostly lower on Tuesday even as U.K. markets held somewhat steady, helped by a weakening pound and deal-making news.

While the U.K.’s FTSE 100 Index is just below the unchanged line, the French CAC 40 Index is down by 0.5 percent and the German DAX Index is down by 0.7 percent.

On the data front, reports on German industrial output, exports and U.K. house prices painted a mixed picture of regional economies.

Cement giant LafargeHolcim has moved lower after its first-quarter recurring EBITDA fell 7.7 percent on a like-for-like basis, affected by the especially harsh winter in North America and Europe.

Adecco Group has also tumbled. The staffing firm’s first-quarter net income fell 26 percent due to one-offs and investments.

Danish hearing aid maker William Demant Holding has plummeted after warning of lower revenue.

Deutsche Post shares have also slumped. The German postal and logistics group confirmed its 2018 targets after reporting a fall in first-quarter consolidated net profit.

On the positive side, consumer products giant Unilever has rallied after commencing the first tranche of its share buyback program.

Shire Plc shares have also jumped in London after Japan’s Takeda Pharmaceutical announced it had reached an agreement on the terms of a recommended offer to acquire the Irish drugmaker.

Similarly, Virgin Money Holdings has soared after receiving a preliminary and conditional proposal from CYBG.

U.S. Economic Reports

At 1 pm ET, the Treasury Department is scheduled to announce the results of its auction of $31 billion worth of three-year notes.

Stocks In Focus

Shares of Dish Network (DISH) are moving lower in pre-market trading after the satellite TV provider reported first quarter earnings that matched analyst estimates but on weaker than expected revenues.

Fertilizer producer Mosaic (MOS) may also see early weakness after reporting first quarter earnings that came in below expectations.

Shares of Hertz Global (HTZ) is also likely to come under pressure after the car rental company reported a wider than expected first quarter loss.

On the other hand, shares of Dean Foods (DF) are moving sharply higher in pre-market trading after the dairy producer reported better than expected first quarter results.

Drug maker Valeant Pharmaceuticals (VRX) may also see early strength after reporting first quarter revenues that exceeded estimates and raised its full-year guidance.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

Related posts