Tuesday November 10th

10-11-2015

Wall Street to mull IEA report and Fed speaker

U.S. stock index futures crept lower early on Tuesday, following Asian and European shares downwards, after a weak close on Wall Street on Monday. It should be another quiet day for U.S. economic data, with just wholesale inventory for September and trade prices indexes for October out. In addition, the Treasury will sell $24 billion in benchmark 10-year notes. Of likely interest will be a speech from Charles Evans, a member of the Federal Open Market Committee (FOMC), who has historically been dovish. U.S. earnings due during the day include DR Horton and Beazer Homes. Early on Tuesday, markets digested a report from the International Energy Agency (IEA) that forecast the price of oil would reach just $80 per barrel by 2020, "with further increases in price thereafter." In addition, top credit ratings agency, Moody's, reported that the world economy's ability to fight any future shocks would be hampered by years of ultra-low interest rates and high-profile liquidity injections. Major U.S. averages posted their biggest decline in six weeks on Monday, down around 1 percent, as investors pondered the odds of an interest rate hike by the Federal Reserve in December, as well as weak data from China. "We think the performance of the U.S. stock market will be lackluster next year as the Fed tightens policy, even though an improving economy in the U.S. and stabilization in China should prevent a crash (our end-2016 forecast for the S&P 500 is 2,200, versus 2,080 or so now). Against this backdrop, we suspect that US investors will seek out better returns elsewhere," John Higgins, chief markets economist at Capital Economics, said in a report out Monday. Asian shares mostly retreated on Tuesday, tracking a sell-off in offshore equity markets, as a fresh batch of Chinese data added to the uncertainty from a looming interest-rate hike in the U.S. Nikkei adds 0.2%. Japan's benchmark Nikkei 225 index turned positive in the final hour of trading, eking out modest gains to settle at a two-and-a-half-month high. The index also chalked up a four-session winning streak. Oil prices were steady on Tuesday after the International Energy Agency noted unprecedented declines in investment, though gains were limited as the overall picture of a market in glut remains. U.S. crude rose 28 cents to $44.15 a barrel by 7:27 a.m. EDT (1227 GMT), after falling about 1 percent on Monday to $44.15 for a fourth consecutive decline. Brent crude, the global benchmark, was up 19 cents at $47.38 a barrel. The contract slipped 0.5 percent on Monday to $47.19 a barrel, also falling for four trading days in a row. Gold was mired near a three-month low on Tuesday as the dollar edged towards a seven-month peak on prospects the U.S. Federal Reserve will raise interest rates for the first time in a decade in December. A forecast-beating U.S. October employment report on Friday pushed up bets the Fed will increase rates, sending non-interest-paying gold to $1,084.90 an ounce, the lowest level since August. Spot gold was up 0.09 percent at $1,092.80 an ounce, while U.S. gold for December delivery gained $3.70 to $1,091.80 an ounce. Although bullion ended an eight-day losing run on Monday, the technical picture has weakened and the next support is set at the 5-1/2-year trough of $1,077 hit in July, analysts said.