Tuesday January 16th

16-01-2018

Dow futures surge 206 points, index set to hit 26,000 for the first time

U.S. stock index futures were up sharply ahead of Tuesday's open following the long holiday weekend. Dow Jones industrial average futures rose 206 points, setting up the 30-stock index to break above 26,000 for the first time. S&P 500 and Nasdaq 100 futures gained 11.25 points and 36 points, respectively. On Monday, U.S. markets were closed for trade for Martin Luther King Jr., Day. Markets overseas Tuesday, meanwhile, were mostly posting gains. U.S. stocks have been rallying on the back of a stronger U.S. economy, tax reform, and optimism heading into earnings season. During the last session on Friday, stocks hit record highs, with the Dow closing more than 200 points higher. UnitedHealth posted better-than-expected earnings and sales. Citigroup reported adjusted earnings that surpassed estimates, while revenue came in line with expectations. CSX is set to report later on Tuesday. Earnings season is off to a strong start thus far. Of the S&P 500 companies that had reported as of Friday, 69 percent have surpassed earnings-per-share estimates while 85 percent have beaten expectations on the top line, according to FactSet. Many of their employees will also see more after-tax pay, resulting from the increase in the standard deduction and the lowering of individual tax rates. In data, the latest Empire State Manufacturing survey is set to report at 8:30 a.m. ET. Elsewhere, cryptocurrencies were in focus as bitcoin hit a six-week low, following reports indicating an escalated crackdown on the cryptocurrency market in China. Bitcoin sank below $12,000. The euro hovered near a three-year peak amid heightened expectations the European Central Bankmay soon pare its monetary stimulus. The U.S. dollar has been showing some signs of weakness in recent sessions. Markets will also be keeping a close eye on bond markets, after investors analyzed the risk of China halting its Treasury bond purchases last week. Bloomberg reported last Wednesday, citing people familiar with the matter, that officials in Beijing had recommended that China's government lower — or even potentially cease — buying U.S. sovereign debt. China's currency regulator has, however, since refuted the report, which has eased sentiment in U.S. markets. Elsewhere, oil prices were slightly lower, although Brent crude hovered close to the $70 mark, while U.S. crude rose above $64 per barrel. Most Asian markets closed higher on Tuesday as the dollar nursed overnight losses. Greater China markets, which had slid in the last session, edged higher. Japan's Nikkei 225, which had hovered near the flat line early in the session, rose 1 percent, or 236.93 points, to close at 23,951.81 as the dollar edged up against the yen. The index touched its highest levels in 26 years earlier in the session. Across the Korean Strait, the Kospi erased early losses to close 0.72 percent higher. The Hang Seng Index bounced 1.46 percent at 3:00 p.m. HK/SIN, with the benchmark looking set to notch a record close. On the mainland, the Shanghai composite edged up 0.79 percent to end at 3,437.48 and the Shenzhen composite rose 0.72 percent to finish at 1,927.56. Gold fell on Tuesday from the previous day's four-month high, reflecting losses across precious metals and commodities more widely, as the dollar clawed back some lost ground after hitting a three-year low against a currency basket. Gold's move lower snapped four straight days of gains in the metal after the retreat of the dollar, in which it is priced, made it cheaper for holders of other currencies. Spot gold was down 0.4 percent at $1,334.55 an ounce, while U.S. gold futures for February delivery were 10 cents an ounce lower at $1,334.80.