Tuesday’s market minute
- Global actions rise in support of stimulus as EU leaders agree on a historic 1.85 trillion euro bailout and budget package as US lawmakers resume talks in Washington.
- EU leaders will allow the triple A-rated European Commission to raise € 750 billion for member states in capital markets, and then disburse cash to the bloc’s 27 member states.
- Democrats in Congress will meet Tuesday with the White House to try to find a compromise between the House and Senate bailout plans.
- Vaccine hopes, stimulus boosts commodity markets, raising oil prices and lowering the US dollar in overnight trade.
- However, infections in the United States continue to rise, albeit at a slower rate, with Florida reporting 10,000 new infections for the sixth consecutive day.
- US equity futures suggest a firmer opening on Wall Street ahead of Coca-Cola and Lockheed Martin earnings before the start of trading and Texas Instruments after the bell.
US equity futures extended higher on Tuesday as the dollar fell and oil prices rebounded as investors gambled on the market impact of a new stimulus from the European Union and a possible advance in the Coronavirus rescue spending among lawmakers on Capitol Hill.
EU leaders agreed on a historic 1.85 trillion euro budget and stimulus package early Tuesday in Brussels, after five days of marathon talks that will see the region’s executive, the European Commission, raise $ 750 billion. euros in the capital markets and spread it among the 27 members. state. The EU leadership also agreed on a budget of € 1.1 trillion, covering the next six years of the bloc’s spending priorities, during controversial negotiations in the Belgian capital.
Meanwhile, Democratic lawmakers in Congress will meet with advisers to President Donald Trump today to resolve a possible compromise that could close the $ 2 trillion gap between the House stimulus bill, which was passed in mid-May, and the Republican Senate preference for a $ 1 trillion Plan funded by a payroll tax cut.
However, lawmakers must find that compromise soon, as legal unemployment benefits, which protect the more than 30 million Americans who are still out of work as a result of the global pandemic, will be exhausted by the end of next week. .
Markets were also fueled by yesterday’s twin developments in coronavirus vaccine research, and in particular an Oxford University / AstraZeneca plc (AZN) – Get report study, suggesting a long-term solution to the pandemic, which has claimed the lives of more than 600,000 people since its outbreak in early January.
Asian stocks rebounded higher, led by large gains in Australia and Hong Kong, while European stocks rose to the highest levels in nearly five months after the talks in Brussels progressed early in the morning.
Wall Street looks set to follow that optimism in a solid opening bell, with Dow Jones Industrial Average-linked contracts suggesting a 245-point gain, thanks in part to a 5.2% pre-market move for IBM Inc (IBM) – Get report – and those linked to the S&P 500, which approached positive territory during the year last night, indicating an advance of 24 points.
Tech stocks are also slated to make more gains on Monday after the Nasdaq Composite closed at another all-time high last night, fueled by big moves on Amazon and Apple, reporting quarterly gains this week and next. Futures contracts linked to the technology-focused benchmark suggest an initial gain of around 100 points.
However, 10-year Treasury yields remain in the low 0.6% range and trade at 0.612% overnight as investors remain cautious amid an ever-increasing rate of EE coronavirus infections. And closing orders scattered in major economies around the world. world.
Oil prices, however, rebounded in the hope that both the government stimulus, along with the $ 17 trillion spent by central banks around the world, will ignite demand for basic products during the second half of the year.
WTI contracts for August delivery, the US benchmark, have traded 49 cents more since their closing on Monday in New York and changed hands at $ 41.41 a barrel early in the European trade, while Brent contracts for September, the global benchmark, saw 62 more cents at $ 43.90 per barrel
Second-quarter earnings reports are likely to dominate the tape early Tuesday, with updates from Coca-Cola (KO) – Get report, Texas Instruments (TXN) – Get report, Lockheed Martin (LMT) – Get report and Philip Morris (P.M) – Get report expected before the start of trading.
Heavy weights like Amazon (AMZN) – Get reportMicrosoft (MSFTS) , AT&T (T) – Get reportIntel (INTC) – Get report to report quarterly earnings this week, with a key report also expected from Tesla (TSLA) – Get report On Wednesday, that could cement the electronic car maker’s inclusion in the S&P 500.
With around 50 of the S&P 500 reporting so far this season of earnings, and 85 at the end of this week, collective earnings are forecast to fall 43.7% from last year, with a drop of nearly 11% in general income, according to companies. in the worst of the pandemic closings earlier this year.
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