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U.S. stock futures resumed their rally Tuesday as optimism over the Chinese economy lifted risk appetite.
How are stock-index futures trading
-
S&P 500 futures
ES00,
+0.74%
rose 25 points, or 0.6%, to 3991 -
Dow Jones Industrial Average futures
YM00,
+0.41%
added 142 points, or 0.4%, to 33703 -
Nasdaq 100 futures
NQ00,
+1.20%
climbed 116 points, or 1%, to 11851
On Monday, the Dow Jones Industrial Average
DJIA,
fell 211 points, or 0.63%, to 33537, the S&P 500
SPX,
declined 36 points, or 0.89%, to 3957, and the Nasdaq Composite
COMP,
dropped 127 points, or 1.12%, to 11196. The Nasdaq Composite is up 8.5% from its 2022 closing low hit on October 14, but remains down 28.4% for the year to date.
What’s driving markets
The Wall Street rally sparked by last week’s softer-than-expected U.S. consumer inflation data was back on course, assisted by positive China-related news.
Hong Kong’s Hang Seng
HSI,
jumped 4.1%, taking its gains so far in November to 24.8%, as Chinese listed stocks welcomed signs of cooling U.S./Sino tensions, Beijing’s intentions to support its beleaguered property sector, and indications the mainland government would ease COVID-19 restrictions.
The upbeat tone from Asia — which included Taiwan Semiconductor Manufacturing Company
2330,
jumping 7.8% on news Warren Buffett had bought a $5 billion stake — underpinned European bourses and U.S. futures.
“The injection of optimism inserted into the limbs of the financial market after last week’s U.S. CPI report showed some signs of fading yesterday although there’s been a recovery in Asia as China continues to support the economy and the interpretation of Biden/Xi meeting yesterday is spun a bit more positively in Asia,” said Jim Reid, strategist at Deutsche Bank.
Analysts increasingly expect stocks to enjoy a positive end to the year. “The near-term picture still looks positive for U.S. benchmark indices and while momentum has reached intra-day overbought levels, this doesn’t imply a selloff has to happen right away,” said Mark Newton, head of technical strategy at Fundstrat.
“It still looks possible to gain further this week with targets up near SPX 4050-75 and larger targets up near 4120. While I do expect that recent gains will require some consolidation, this might hold off until late week ahead of a push higher post Thanksgiving into early December. Overall, last week’s surge keeps trends positive near term,” Newton added.
However, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said that while the latest developments in China were good news for the global economy they were “bad news for global inflation”.
“Rising Chinese demand next year, will put a renewed positive pressure on energy and commodity prices. Therefore, Chinese recovery, if materializes, will be the next battle in the global inflation war,” she wrote in a morning bulletin.
That’s a view likely not lost on Fed officials, who over recent days have been trying to calm the market’s ebullient reaction to the latest signs of cooling U.S. price pressures.
Fed speakers on Tuesday include Philadelphia Fed President Patrick Harker talking about the economic outlook at 9 a.m. and Fed Vice Chair Michael Barr testifying on regulation at the Senate Banking Committee, starting at 10 a.m. All times Eastern.
U.S. economic updates set for release on Tuesday include the producer price index for October and the Empire State manufacturing index for November, both due at 8:30 a.m. Eastern. Companies reporting earnings include Walmart
WMT,
and Home Depot
HD,
