Wednesday May 30th

30-05-2018

US futures point to a rebound after Italy's political woes fuel global sell-off

U.S. stock index futures pointed to a higher open Wednesday morning, rebounding after political turmoil in Italy sent markets tumbling in the previous session. At 8:17 a.m. ET, Dow futures rose 144 points, implying a higher open of 175 points for the index. Nasdaq and S&P 500 futures also pointed to a positive start to the session for both of their respective markets. On Tuesday, the Dow Jones industrial average fell 391.64 points — or 1.58 percent — to finish at 24,361.45 amid losses in Goldman Sachs, Boeing, and J.P. Morgan Chase. Italy's political woes have roiled global financial markets amid news the prospect of snap elections in Rome could be framed as a de facto referendum on the country's role in Europe. Italian stocks climbed higher on Wednesday morning but soon snapped back when the leader of the right-wing Lega party, Matteo Salvini, called for snap elections as soon as possible. Hiring decelerated in May, with private companies adding 178,000 positions even amid other signs of a tightening jobs market, according to a report Wednesday from ADP and Moody's Analytics. The number missed expectations of economists surveyed by Reuters who had forecast 190,000. Moody's Analytics and ADP also revised its April number downward to 163,000, a decline of 41,000 from the original 204,000. Meanwhile, the Federal Reserve will release its Beige Book at 2:00 p.m. ET. On the earnings front, Michael Kors and Dick's Sporting Goods will post new earnings figures before the bell with PVH and Box reporting after the bell. Asian markets closed lower on Wednesday as a sell-off in U.S. and European markets weighed on sentiment during the Asian trading session. The political crisis in Italy took center stage, with investors concerned over its implications for the rest of the euro zone. The Nikkei 225 fell 1.52 percent, or 339.91 points, to 22,018.52 in Tokyo, with the banking and non-ferrous metals sectors among the worst-performing sectors. The broader Topix was down 1.46 percent as 32 of its 33 subindexes finished lower. The Kospi slid 1.96 percent to close at 2,409.03, as heavyweights like Samsung Electronics and Posco sank 3.51 percent and 2.01 percent, respectively. Greater China markets were also spooked. Hong Kong's Hang Seng Index dropped 1.55 percent by 3:20 p.m. HK/SIN, with the property sector falling 1.9 percent. Heavily weighted financials also came under pressure. On the mainland, the Shanghai composite lost 2.53 percent to close at 3,041.65. Oil climbed towards $76 a barrel on Wednesday, supported by tight supplies despite expectations OPEC and its allies will pump more in the second half of 2018 and helped by forecasts U.S. inventories fell. Global benchmark Brent crude has dropped almost $5 from a 3 1/2-year high of $80.50 a barrel on May 17, after reports that OPEC and Russia may increase supply at a June meeting. This would reverse policy after 17 months of supply curbs that have largely removed excess global oil inventories. Brent rose 40 cents to $75.79 a barrel by 0925 GMT, after trading as low as $74.81 earlier. U.S. crude was up 25 cents at $66.98. Gold prices were steady on Wednesday as concerns about political turmoil in Italy and over a trade conflict between China and the United States outweighed strength in the dollar. Italy kept the dollar at 10-month highs versus the euro amid concerns that repeat elections may become a de-facto referendum on Italian membership of the currency bloc. The turbulence underpinned gold due to its appeal as a store of value during political and financial uncertainty. U.S. benchmark 10-year Treasury yields [US/] on Tuesday registered their largest one-day drop since Brexit nearly two years ago. Higher rates could dent demand for non-interest-paying gold. Spot gold barely changed at $1,298.98 per ounce by 0932 GMT while U.S. gold futures for June delivery edged slightly lower to $1,298.70 per ounce.