The major U.S. index futures are pointing to a higher opening on Wednesday following the sell-off seen in the previous session.
Bargain hunting may contribute to strength on Wall Street, as some traders pick up stocks at reduced levels after the steep drop seen on Tuesday.
However, lingering concerns about political uncertainty in Italy may keep some traders from getting back into the markets.
Following the long holiday weekend, stocks moved sharply lower during trading on Tuesday. The major averages moved lower early in the session and saw further downside as the day progressed.
The major averages climbed off their worst levels going into the close but still ended the day firmly in negative territory. The Dow plunged 391.64 points or 1.6 percent to 24,361.45, the Nasdaq fell 37.26 points or 0.5 percent to 7,396.59 and the S&P 500 tumbled 31.47 points or 1.2 percent to 2,689.86.
The sell-off on Wall Street came as traders used concerns about political uncertainty in Italy as an excuse to sell stocks.
Italy’s president has appointed a former International Monetary Fund official as interim prime minister with the task of planning for snap polls and passing the next budget after weeks of uncertainty.
Banking stocks turned in some of the market’s worst performances on the day, dragging the KBW Bank Index down by 3.9 percent.
Steel, brokerage, and telecom stocks also saw considerable weakness, moving lower along with most of the other major sectors.
Commodity, Currency Markets
Crude oil futures are rising $0.39 to $67.12 a barrel after tumbling $1.15 to $66.73 a barrel on Tuesday. Meanwhile, after falling $4.90 to $1,304.10 an ounce in the previous session, gold futures are inching up $0.10 to $1,304.20 an ounce.
On the currency front, the U.S. dollar is trading at 108.82 yen compared to the 108.77 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1625 compared to yesterday’s $1.1540.
Asian stocks succumbed to heavy selling pressure on Wednesday as lingering concerns over US-China trade talks, political uncertainty in Spain and fears that a snap election in Italy will turn into referendum on the country’s euro membership sapped investors’ appetite for risk.
Chinese shares ended lower following reports that the Trump administration is considering imposing a hefty 25 percent tariff on the USD 50 billion worth of Chinese goods even as a U.S. delegation is set to travel to Beijing for talks to resolve the dispute.
The benchmark Shanghai Composite index dropped 79.02 points or 2.53 percent to finish at 3,041.44 while Hong Kong’s Hang Seng index ended down 427.79 points or 1.40 percent at 30,056.79.
Japanese shares fell sharply as global bourses extended losses and the yen gained ground against the dollar and euro on fears over the stability of euro zone. The Nikkei average slumped 339.91 points or 1.52 percent to 22,018.52, while the broader Topix index closed down 1.46 percent at 1,736.13.
Automakers Toyota, Honda Motor and Nissan Motor as well as banks Mitsubishi UFJ Financial and Sumitomo Mitsui Financial lost 2-3 percent. Gaming giant Nintendo soared 4.3 percent after announcing new Pokemon games.
Investors ignored preliminary figures showing that Japan’s retail sales increased at a faster-than-expected pace in April. Retail sales climbed 1.6 percent year-over-year in April, faster than the 1.0 percent rise in March.
Australian shares fell notably amid broad-based selling as investors rushed to safe-haven assets such as U.S. Treasuries. The S&P/ASX 200 index dropped 28.90 points or 0.48 percent to 5,984.70 while the broader All Ordinaries index ended down 27.90 points or 0.46 percent at 6,093.80.
The big four banks dropped 1-2 percent and miners Rio Tinto and South32 fell over 1 percent amid weakness in metal and iron ore prices while gold and healthcare stocks rose on defensive buying. Evolution Mining advanced 1.3 percent and CSL rose over 1 percent.
Energy stocks closed broadly lower after crude oil prices fell for the fifth straight session overnight.
In economic news, total number of building approvals issued in Australia decreased at a faster-than-expected pace in April, data from the Australian Bureau of Statistics revealed.
European stocks were trading mixed on Wednesday as investors continued to fret over Italian politics and the country’s future in the European Union.
Overall losses, if any, remained limited as Italian equities rebounded on reports that the major parties in Italy are calling for President Sergio Mattarella to dissolve parliament immediately and conduct fresh elections as early as July.
On the data front, the day’s economic reports proved to be a mixed bag.
The pan-European Stoxx Europe 600 index was down 0.1 percent at 383.98 in late opening deals after losing 1.4 percent in the previous session.
The German DAX was moving up 0.4 percent and the U.K.’s FTSE 100 was marginally higher while France’s CAC 40 was down 0.6 percent after the release of disappointing data. Italy’s FTSE MIB was up 0.4 percent after falling around 4 percent so far this week.
German biotech firm Evotec rose over 1 percent after an update that it will receive a $6 million payment from Celgene following Celgene’s decision to expand the collaboration to include additional cell lines.
Vivendi shares slumped nearly 5 percent in Paris after its pay-television channel lost its three-decade hold on the broadcasting rights to French soccer.
Royal Bank of Scotland Group shares fell over 1 percent in London after Ewen Stevenson resigned from his role as Chief Financial Officer and Executive Director to take up an opportunity elsewhere.
In economic releases, Germany’s jobless rate dropped to adjusted 3.4 percent in April from 3.5 percent in March, figures from Destatis revealed. Another report showed that German retail sales expanded for the first time in five months in April.
GDP and consumer spending figures from France disappointed investors.
While French consumer spending dropped 1.5 percent month-over-month in April, reversing a 0.2 percent rise in March, France’s GDP grew 0.2 percent sequentially in the first quarter, slower than the 0.7 percent expansion registered a quarter ago, second estimate from the country’s statistical office showed.
Eurozone economic sentiment and business confidence data for May are due later in the session.
U.S. Economic Reports
Payroll processor ADP released a report on Wednesday showing private sector employment increased by slightly less than expected in the month of May.
ADP said private sector employment climbed by 178,000 jobs in May after rising by a downwardly revised 163,000 jobs in April.
Economists had expected employment to increase by 190,000 jobs compared to the jump of 204,000 jobs originally reported for the previous month.
At 2 pm ET, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.
by RTTNews Staff Writer
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