Futures Pointing To Modestly Higher Open On Wall Street

The major U.S. index futures are currently pointing to a modestly higher open on Tuesday, with stocks likely to move back to the upside after ending yesterday’s choppy trading session slightly lower.

The upward momentum on Wall Street comes as crude oil prices have pulled back well off their highs after surging earlier this morning.

U.S. crude oil futures are currently still up by 0.4 percent but had spiked by a much as 3 percent amid an apparent impasse in negotiations over the reopening of the Strait of Hormuz.

However, traders may remain reluctant to make significant moves ahead of the release of key U.S. inflation data in the coming days.

The Labor Department is scheduled to release reports on consumer and producer inflation on Wednesday and Thursday, respectively.

On the heels of last Friday’s report showing an unexpected decrease in U.S. employment, the data could impact the outlook for interest rates.

“US equities are hovering near record highs, but the next leg of the rally will depend on Wednesday’s US inflation report,” said Daniela Hathorn, Senior Market Analyst at Capital.com.

“After another strong earnings season, particularly among the technology giants, investors have become increasingly comfortable with the idea that the economy can continue expanding without forcing the Federal Reserve into further policy tightening,” she added. “Whether that optimism proves justified now hinges on the inflation data.”

Following the strong performance seen during the previous week, stocks showed a lack of direction over the course of the trading day on Monday. The major averages spent the day bouncing back and forth across the unchanged line before closing slightly lower.

The Dow slipped 60.95 points or 0.1 percent to 53,975.98, the Nasdaq fell 85.26 points or 0.3 percent to 26,605.36 and the S&P 500 edged down 4.53 points or 0.1 percent to 7,753.11.

The choppy trading on Wall Street came as traders took step back to assess the recent strength in the markets, which saw the S&P 500 reach a new record closing high last Friday.

Investors may also have been reluctant to make significant moves ahead of the release of key U.S. inflation data in the coming days.

Traders also kept an eye on developments in the Middle East, where Iran and Oman are reportedly close on a deal regarding the Strait or Hormuz but Tehran has indicated it is resisting talks with the U.S.

Iran has warned that it will not reopen the Strait of Hormuz unless the United States meets a series of conditions, denting hopes for a return to stability in global energy markets and leading to a sharp increase in crude oil prices.

Despite the lackluster performance by the broader markets, energy stocks moved sharply higher along with the price of crude oil.

With U.S. crude oil futures surging by nearly 5 percent, the Philadelphia Oil Service Index soared by 5.8 percent and the NYSE Arca Oil Index shot up by 5.3 percent.

Significant strength was also visible among software stocks, as reflected by the 1.9 percent gain posted by the Dow Jones U.S. Software Index.

On the other hand, the spike in crude oil prices contributed to substantial weakness among airline stocks, with the NYSE Arca Airline Index plunging by 4.4 percent.

Semiconductor stocks also showed a considerable move to the downside, dragging the Philadelphia Semiconductor Index down by 2.9 percent.

Commodity, Currency Markets

Crude oil futures are rising $0.29 to $82.42 a barrel after soaring $3.95 to $82.13 a barrel on Monday. Meanwhile, after climbing $20 to $4,419.70 an ounce in the previous session, gold futures are advancing $28.60 to $4,448.30 an ounce.

On the currency front, the U.S. dollar is trading at 159.24 yen compared to the 159.30 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1540 compared to yesterday’s $1.1542.

Asia

Asian stocks ended mixed in cautious trading on Tuesday, with Japanese markets closed for a holiday. Amid a lack of any breakthrough in Middle East talks and protracted uncertainty over the global inflation outlook, investors braced for key U.S. inflation readings due this week.

The U.S. dollar was largely subdued in Asian trading, while Brent crude futures climbed above $89 a barrel amid fading hopes for a deal between Washington and Tehran to reopen the Strait of Hormuz, a critical waterway for global energy supplies.

Gold dipped to $4,363 an ounce after two consecutive sessions of gains on receding Fed hike bets and reports suggesting that China’s central bank stepped up gold purchases in July.

China’s Shanghai Composite Index fell 0.8 percent to 3,934.09 as concerns over stalled U.S.-Iran talks overshadowed Guoyi’s strong market debut. Hong Kong’s Hang Seng Index ended 1.1 percent lower at 25,652.82.

Seoul stocks ended higher for a second straight session as major chip heavyweights rose on bargain hunting. The Kospi Index climbed 0.7 percent to 6,345.53. Semiconductor heavyweight Samsung Electronics surged 4.1 percent.

Australian markets ended slightly higher as the Reserve Bank of Australia left interest rates unchanged for a second consecutive meeting in a unanimous decision but left the door open for further rate hikes if inflation risks increase.

The benchmark S&P/ASX 200 Index edged up by 0.2 percent to 9,250.60, led by gains in commodity-linked stocks. The broader All Ordinaries Index closed up 0.2 percent at 9,443.70.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slipped 0.2 percent to 13,860.66 amid uncertainty over National Party leadership and the U.S.-Iran stalemate.

Europe

European stocks are subdued on Tuesday even as energy shares surge after U.S. President Donald Trump said he has instructed American representatives to firmly include compensation demands from Iran in any future negotiations, complicating efforts to reopen the Strait of Hormuz.

Brent crude futures jumped nearly 3 percent toward $90 a barrel due to uncertainty over when the Strait of Hormuz may reopen.

While the French CAC 40 Index is down by 0.1 percent, the U.K.’s FTSE 10) index is up by 0.1 percent and the German DAX Index is up by 0.2 percent.

International Workplace Group shares have tumbled in London. The British office-space provider reported a loss before tax of $20 million, compared with a profit before tax of $12 million in the prior year.

Holiday Inn owner InterContinental Hotels Group has also fallen after room revenue growth, a key measure of performance, slowed in the second quarter.

Spirax Group has plummeted. The thermal energy and fluid technology firm reiterated its guidance for mid-single-digit organic revenue growth and margin expansion for the full year after posting improved first-half results.

Meanwhile, energy stocks are moving higher, with BP Plc, Shell and TotalEnergies climbing after a renewed uptick in crude oil prices.

U.S. Economic News

The National Association of Realtors is due to release its report on existing home sales in the month of July at 10 am ET. Existing home sales are expected to decrease to an annual rate of 4.05 million in July from a rate of 4.09 million in June.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $58 billion worth of three-year notes.