Monday October 22nd

22-10-2018

US stock futures rise after massive rally in Chinese shares

U.S. stock-index futures rose on Monday following a massive rally in Chinese equities. At around 7 a.m. ET, Dow Jones Industrial Average futures were up 83 points, pointing to a gain of 32.66 points. S&P 500 and the Nasdaq 100 also indicated gains at the open. In China, the Shanghai Composite rose more than 4 percent to notch its best day since March 2, 2016. The sharp move higher comes after Chinese authorities pledged to support China’s economy and offset the negative impact of U.S. tariffs. In Japan, the Nikkei 225 erased earlier losses to close 0.37 percent higher at 22,614.82 while the Topix index gained 0.15 percent to end the trading day at 1,695.31. South Korea’s Kospi gained 0.25 percent to close at 2,161.71. In Hong Kong, the Hang Seng index rose 2.22 percent in afternoon trade. Shares of Jacobs Engineering, Caterpillar and Advanced Micro Devices all rose at least 1.4 percent in the premarket. These companies have significant exposure to the Chinese market, so they benefit from strong economic growth there. Equities also gained after Moody’s downgraded Italy’s debt rating, but kept it just above junk rating. Over the weekend, Italian Finance Minister Giovanni Tria said he looks forward to “constructive” talks with the European Union over its budget. Italian bonds had been selling off amid worries over Italy’s budget, but on Monday rallied sharply. Investors also pored through a slew of corporate earnings on Monday. Halliburton and offroad vehicle maker Polaris Industries both reported better-than-expected earnings before the bell Monday. Shares of Halliburton and Polaris gained 0.7 percent and 3.5 percent in the premarket, respectively. Several other companies are scheduled to report earnings this week, including Dow members 3M, McDonald’s, Caterpillar and United Technologies. Amazon and Alphabet are also set to report this week. The current earnings season is off to a good start thus far. According to data from FactSet, 81.8 percent of the S&P 500 companies that have posted earnings have topped expectations. In economic data, the Chicago Federal Reserve will release national activity index figures at 8:30 a.m. ET. Oil edged above $80 a barrel on Monday, lifted by nervousness over a worsening diplomatic crisis between Saudi Arabia and the West, just two weeks before U.S. sanctions potentially choke off Iranian crude supplies. Saudi energy minister Khalid al-Falih told Russia’s TASS news agency that his country had no intention of unleashing a 1973-style oil embargo on Western consumers, but rather was focused on raising output to compensate for supply losses elsewhere, such as Iran. Several U.S. lawmakers have suggested imposing sanctions on Saudi Arabia over the killing of Saudi journalist Jamal Khashoggi, while the kingdom, the world’s largest oil exporter, pledged to retaliate to any sanctions with “bigger measures”. Falih said Saudi Arabia would soon raise output to 11 million barrels per day (bpd) from the current 10.7 million. He added that Riyadh had capacity to increase output to 12 million bpd and Gulf OPEC ally, the United Arab Emirates, could add a further 200,000 bpd. Benchmark Brent crude oil futures rose 45 cents on the day to $80.23 a barrel by 0900 GMT, while U.S. crude futures rose 31 cents to $69.43 a barrel. Gold prices edged higher on Monday towards a 2-1/2-month peak hit last week as the dollar eased and worries over rising political tensions and slowing global economic growth lent support to the metal. Spot gold was up 0.1 percent at $1,226.43 an ounce at 0745 GMT. On Oct. 15, the bullion touched its highest since July 26 at $1,233.26. U.S. gold futures were up 0.1 percent at $1,229.40 an ounce.