Tuesday August 25th

25-08-2015

Dow futures spike more then 600 points

U.S. stock index futures pointed to a sharply higher open on Tuesday, recovering from the plunge seen in global stocks on Monday as mayhem in Chinese markets and interest rate fears dominated markets. Dow futures briefly rose more than 600 points in premarket trading, implying a 467 point bounce at the open and shrugging off deeper selling in China. Futures extended gains after the Chinese central bank announced plans to cut its one year lending rate to 4.6 percent, which the People's Bank of China said was provide long-term liquidity and help support the economy. Equity markets in China fell further in the final hour of trading on Tuesday, with the Shanghai Composite settling below the key 3,000 mark, to end the day down 7.6 percent. Japan's Nikkei 225 index was the second-biggest laggard in the region, closing down 4 percent, after turning negative in the afternoon trading session Tuesday. European equities bucked the weakness seen in Asia, trading firmly in the green. The pan-European Stoxx 600 surged over 4 percent, with French, German and U.K. stocks all up between 3.5 and 4.5 percent. Basic resources stocks were the key outperformer, shooting around 7 percent higher. On the data front, there are a flurry of housing market indicators due Tuesday, with the FHFA and Case-Shiller home price indices for June both due at 9.00 a.m. ET and new home sales figures for July at 10.00 a.m. Other releases include the Conference Board's consumer confidence indicator for August at 10.00 a.m. as well as the flash Markit services and composite PMIs for the same month. "After yesterday's data vacuum, we get U.S. new home sales and Conference Board consumer confidence this afternoon. Neither of these is going to change anyone's expectation about the outlook for Fed policy - the debate rages on between those who think the Fed should have hiked ages ago, those who expect them to raise rates this year and those who think doing so would be a catastrophic mistake," said Kit Juckes, global head of foreign exchange and macro strategist at Societe Generale. BHP Billiton reported full-year earnings earlier Tuesday which sent shares around 3 percent higher in London. This came despite the mining giant reporting an 86 percent plunge in net profit on the back of falling commodity prices, but investors cheered the group's cost-cutting measures. It comes after stocks started Monday with one of the ugliest opening selloffs in memory, and the dramatic move in the Dow was the biggest intraday swing ever. U.S. stocks plunged more than 3.5 percent over the day, closing off session lows in high volume trade as fears of slowing growth in China pressured global markets. S&P 500 ended nearly 80 points lower, off session lows of about 104 points lower but still in correction territory after the tech sector failed intraday attempts to post gains. Nine of the 10 sectors are in correction territory, with consumer staples less than 1 percent away. Cumulative trade volume was 13.94 billion shares, the highest volume day since Aug. 10, 2011. Composite trade volume on the New York Stock Exchange was 6.57 billion shares, the heaviest since Oct. 27, 2011. Oil bounced back from heavy losses on Tuesday but global oversupply and worries over the severity of the economic slowdown in China, the world's top commodity consumer, kept prices near 6-1/2-year lows. European equity markets recovered on Tuesday but Chinese stock markets closed down more than 7 percent, with panic selling intensifying after the flagship Shanghai Composite Index crashed through key support at 3,000 points. U.S. crude, also known at West Texas Intermediate or WTI, was up $1.10 at $39.34 a barrel by 0930 GMT, while Brent was up $1.20 at $43.89. Gold fell on Tuesday as global markets rebounded from the previous day's rout after China cut interest rates to stimulate its wavering economy, with European stocks rising 4.5 percent and the dollar up 1 percent versus the euro. Autocatalyst metal palladium continued to slide, however, falling as much as 7 percent to its lowest in five years. Spot gold was down 0.3 percent at $1,151.21 an ounce, while U.S. gold futures for December delivery were down $2.50 an ounce at $1,151.10.