Tuesday June 28th


Street set to bounce as Brexit sell-off wanes

U.S. stock-index futures indicated a higher start to Wall Street trade on Tuesday as markets in Europe rebounded after the two-day sharp selloff. The pan-European STOXX 600 index traded 2.4 percent higher on Tuesday, with the U.K.'s benchmark, internationally focused FTSE 100 up 2.5 percent. Dow futures held about 200 points higher, while S&P and Nasdaq futures gained 22 points and 48 points, respectively. Gains on Tuesday would come after a record 2-day global market cap loss of $3.0 trillion, according to Howard Silverblatt of S&P Dow Jones Indices. "Markets are bouncing, and can bounce further but the clouds on the horizon are dark, and they're real," Kit Juckes, strategist at Societe Generale, said in a note on Tuesday. "There's a pattern for Monday mornings to extend moves of the previous week before Tuesday sees everyone take stock," he added. The dollar index, which tracks the greenback against a basket of major currencies, declined early on Tuesday, after four days of gains. Similarly, U.S. Treasury bond yields rose and gold traded lower, as the surge in "safe-haven" trades that followed the U.K.'s "Brexit" vote waned. In economic news, the final revision on first-quarter U.S. GDP came in at 1.1 percent versus the prior read of 0.8 percent. The S&P/Case-Shiller 20-City Composite Index rose 5.4 percent year-over-year in April. Other data due for release include consumer confidence. Carnival will report earnings early in the day and Nike will report after the markets close. Despite the rebound in markets, the fallout from the U.K.'s surprise vote to leave the European Union (EU) last week continues. On Monday, the U.K. lost its final triple-A ratings, with Standard & Poor's and Fitch Ratings both announcing downgrades. A two-day EU summit will kick off on Tuesday. The session's slide in Asia between red and green followed gains in some major Asian bourses on Monday, with analysts suggesting effects of a Brexit vote on the region would likely be short term. In Japan, the Nikkei 225 closed nearly flat at 15,323.14, after wavering between gains and losses throughout the session. Across the Korean Strait, the Kospi added 9.37 points, or 0.49 percent, to 1,936.22, reversing earlier losses of nearly 0.5 percent. Hong Kong's Hang Seng index was down 0.57 percent as of 3:09 p.m. HK/SIN. The Shanghai composite closed up 17.05 points, or 0.59 percent, at 2,912.75, and the Shenzhen composite gained 23.67 points, or 1.21 percent, to 1,970.37. Brent crude rose above $48 a barrel on Tuesday as investors took advantage of a two-day slide in crude following Britain's vote to leave the European Union to lock in lower prices. The vote's impact on oil, despite sending global stocks and currencies spiraling, has so far been limited due to expectations of strong summer demand in Asia and the United States and tightening supplies after a two-year rout. A looming strike at several Norwegian oil and gas fields, which threatened to cut output in western Europe's biggest producer, also helped support prices on Tuesday. Brent crude futures were 2.3 percent, or $1.09, higher at $48.25 per barrel at 9:14 a.m. ET (1314 GMT). U.S. West Texas Intermediate (WTI) futures were also 2.5 percent higher, up $1.18 at $47.51 a barrel. A report by industry monitor Genscape that showed a 1.3 million barrel fall in crude inventories at the benchmark's pricing hub in Cushing, Oklahoma, added further support, brokerage PVM said. Gold fell on Tuesday as buyers cashed in gains from the metal's biggest two-day rally since late 2008, made in the wake of Britain's shock vote to quit the European Union last week. The metal jumped to its highest in more than two years at $1,358.20 an ounce on Friday after the referendum on EU membership, and to more than three-year highs in euro and sterling terms. It quickly retreated from that peak, however. Spot gold was down 0.8 percent at $1,313.90 an ounce, while U.S. gold futures for August delivery were down $8.50 an ounce at $1,316.20.