Tuesday October 2nd

2-10-2018

US stock futures drop ahead of the open following Monday's rally

U.S. stock-index futures fell on Tuesday as investors digested a sharp rally to start the fourth quarter in the previous session. Around 7:05 a.m. ET, Dow Jones Industrial Average futures fell 73 points, indicating a decline of 69 points at the open. S&P 500 and Nasdaq 100 futures also declined. Markets around the globe are seeing red Tuesday, with markets in Asia and Europe trading mostly lower. U.S. futures pulled back too, following a stellar session Monday. The Dow closed up almost 200 points, with the S&P 500 also rising, after news emerged that Canada had joined the U.S. and Mexico in a new trade deal. Set to be signed at the end of November, the United States-Mexico-Canada Agreement, or "USMCA" for short, will see all three countries compromise on certain trade aspects. More market access will be granted to U.S. dairy farmers, while Canada has agreed to effectively cap automobile exports to the States. Now investors will be looking to China, to see if Beijing and Washington can find a way to meet eye-to-eye on certain trade elements. Equity futures followed European shares lower amid political fears stemming from Italy. The Stoxx 600 index, which tracks a broad swath of European stocks, fell 0.7 percent. Claudio Borghi, a euroskeptic economist who chairs the budget committee of the lower house of Italy's parliament, said in a radio interview Tuesday that he was "truly convinced" most of the country's problems would be solved if it had its own currency. Borghi's comments were quickly contradicted by Italy's deputy prime minister, Luigi Di Maio, who said said Italy's coalition government did not want to leave the European Union or the single currency. On the economic front, Fed Chair Jerome Powell is scheduled to deliver remarks at the 60th NABE annual meeting in Boston. He is expected to comment on the outlook for inflation and employment. Fed Vice Chair Randal Quarles will be in Washington in front of the Committee on Banking, Housing, and Urban Affairs, where he is set to discuss implementation of the economic growth, regulatory relief and the consumer protection act. No major economic data is due Tuesday. However, investors are preparing for Friday, when the latest nonfarm payrolls data is due. Asia markets were largely negative on Tuesday, as ties between the U.S. and China appeared to have taken a turn for the worse. South Korea's Kospi closed 1.25 percent lower at 2,309.57, despite data showing the country's year-on-year output to be above forecasts. Hong Kong's Hang Seng index continued to decline in the afternoon. As of 3:19 p.m., the index slid 2.36 percent on its first trading day of the week after returning from a public holiday. Over in Japan, however, the Nikkei 225 bucked the overall trend to close higher by 0.1 percent at 24,270.62, while the Topix also advanced by 0.33 percent at 1,824.03. China's markets were closed for a public holiday. Oil prices were mixed on Tuesday but remained near their highest since November 2014 as markets braced for tighter supply once U.S. sanctions against Iran kick in next month. International benchmark Brent crude oil lost 23 cents to $84.75 per barrel by 8:31 a.m. ET (1231 GMT) after reaching a new four-year high of $85.45 in the previous session. U.S. West Texas Intermediate (WTI) crude futures rose 17 cents to $75.47 a barrel, having hit a nearly four-year high of $75.91 earlier in the session. Brent and WTI have roughly tripled compared with lows seen in January 2016, which prompted OPEC and allies led by Russia to curb oil supplies to rebalance an oversupplied market starting in January 2017. Gold nudged higher early Tuesday, having dipped in the previous session as demand for riskier assets picked up after the United States and Canada reached an agreement to salvage a North American free trade deal. Spot gold edged up 0.3 percent to $1,190.81 at 0121 GMT. U.S. gold futures were up 0.3 percent at $1,195 an ounce.