Wednesday market minute
- Global stocks are back from record highs but expect the strongest pace of performance in the first half since 1998.
- Nasdaq keeps pace with Wall Street gains with a 5.7% gain in June, while the S&P 500 leads with a first half gain of around 14.22%.
- The US dollar is poised for its biggest monthly gain in three as investors position themselves for faster inflation and rising rates, yet benchmark 10-year bond yields drop to 1,463% in overnight trading .
- Brent crude surpasses $ 75 a barrel after a larger-than-expected drop in US stocks, although rising Delta-variant infections in Asia limited gains.
- CDC data shows that 154.2 million Americans have been fully vaccinated against the coronavirus, with about 325.1 million doses administered as of Tuesday.
- US equity futures suggest a softer open on Wall Street ahead of ADP June employment data at 8:15 AM ET and Constellation Brands first-quarter earnings.
US equity futures tumbled lower on Wednesday, following a streak of record highs on Wall Street that looks set to limit the best first-half performance for global stocks in more than two decades.
Central bank stimulus, extended government support, historically low interest rates, and a strong recovering economy have combined to push US equity values closer to the $ 50 trillion benchmark this year, and Global stocks have their strongest six-month advance since 1998.
Short-term performance also appears optimistic, and Nigel Green of London’s deVere group noted that “continued strong economic growth in major economies, strong corporate earnings, ultra-low interest rates and a sluggish bond market will mean that investors seeking returns will continue to accumulate in stocks, filling their portfolios to build wealth. “
The headwinds in play heading into Wednesday’s session, and likely over the next two weeks, include the worrying rise in Delta variant coronavirus infections in Europe and Asia, the Federal Reserve’s ability to stay calm versus inflation acceleration data or stronger than expected job growth.
However, once banks enter the second-quarter earnings season during the week of July 12, the focus will turn to corporate earnings and the second-half outlook.
Refinitv’s forecasts suggest that second-quarter earnings for the S&P 500 will rise 65.1% from last year to $ 378.9 billion weighted per shares, led by a strong return in consumer and industrial discretionary earnings.
However, for Wednesday’s session, investors will likely focus on ADP’s 8:15 AM ET private sector jobs report and its implications for Friday June’s non-farm payroll reading. .
Futures contracts linked to the Dow Jones Industrial Average suggest a drop from the opening bell of 95 points, while those linked to the S&P 500 have a price retracement of 9 points from last night’s record close, the fourth in succession, of 4,291.80 points.
The Nasdaq Composite, which has gained 5.7% this month to lead all major US benchmarks, largely thanks to the strength of just four stocks: Apple (AAPL) – Get report, Facebook (full board) – Get report, Microsoft (MSFT) – Get report and Amazon (AMZN) – Get report – is priced at a modest 25 point decline.
In other markets, a larger-than-expected decline in domestic crude stocks of 8.2 million barrels reported last night by the American Petroleum Institute last night has oil on the rise Wednesday, although the peak of the Delta variant in Asia limited gains. as the blockades spread in the main economies of the region.
WTI futures for August delivery rose 37 cents from Tuesday’s close in New York to $ 73.35 a barrel, while Brent contracts for the same month rose 24 cents to $ 75 a barrel.
Overnight in Asia, the surge in coronavirus infections in Japan, just weeks before the scheduled start of the Tokyo Olympics, weighed on the Nikkei 225, which closed 0.07% lower at 28,791, 53 points.
In Europe, the Stoxx 600 scored 1% lower in early Frankfurt trading, even as data showed that euro zone inflation fell to 1.9% in June and regional consumer confidence rose to the highest levels in 18 months. Utilities, cyclicals and energy stocks set the pace for month-end declines, although the benchmark is likely to end the first half of the year with its biggest gain (13.22%) in more than 22 years.