Wednesday May 16th

16-05-2018

US stock futures little changed after Tuesday's drop, yields stabilize

U.S. stock index futures pointed to a little changed open on Wednesday a day after the major index posted sharp losses on the back of rising interest rates. At 7:03 a.m. ET, Dow Jones industrial average futures rose 13 points, indicating a marginal decline of 9.41 points. Nasdaq 100 and the S&P 500 futures also pointed to a flat start to the session for their respective markets. In the previous session, robust retail sales and factory data lifted the U.S. 10-year yield through a psychologically important level to hit 3.095 percent — its highest since 2011. The 10-year yield stabilized below that level on Wednesday, trading at 3.074 percent. The rise in yields hampered U.S. stocks markets amid fears it could undercut stock valuations. Stocks finished sharply lower on Tuesday, with the Dow falling 193 points to snap an eight-day winning streak. Construction on new houses dropped 3.7% in April, but it’s no big deal. Housing starts hit an 11-year high just a month earlier and some comedown was expected. The annual rate of new homes being built declined to 1.29 million last month from a revised 1.34 million pace in March that was the strongest since mid-2007. That’s how many homes builders would erect if they maintained April’s pace through the whole year. Economists polled by MarketWatch has expected starts to total 1.29 million. Permits for new construction slipped a smaller 1.8% to a 1.35 million annual clip, the government said Wednesday. On the earnings front, Tencent, Macy's and Burberry are among the major companies expected to release their latest figures before the opening bell. Cisco Systems and Take-Two Interactive are poised to report earnings after the bell. Most stocks in Asia closed lower on Wednesday as markets processed new geopolitical uncertainty related to North Korea and the U.S. 10-year Treasury yield rising to its highest level in seven years overnight. Japan's Nikkei 225 eased 0.44 percent, or 100.79 points, to close at 22,717.23 and the broader Topix slipped 0.27 percent as mining and oil shares weighed. Elsewhere, South Korea's benchmark Kospi finished the day little changed at 2,459.82 after trading both above and below the flat line, a 0.05 percent gain. Greater China markets drifted lower: Hong Kong's Hang Seng Index shed 0.52 percent by 3:00 p.m. On the mainland, the Shanghai composite declined 0.7 percent to close at 3,169.71 and the Shenzhen composite shed 0.41 percent to finish the session at 1,832.27. Oil prices fell on Wednesday, weighed down by ample supplies despite ongoing output cuts by producer cartel OPEC and looming U.S. sanctions against major crude exporter Iran. Brent crude futures were down 52 cents at $77.91 per barrel by 7:41 a.m. ET (1141 GMT) from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $71.11 a barrel, down 20 cents. Despite the dips, both financial oil benchmarks remained close to their November 2014 highs of $79.47 and $71.92 a barrel respectively, reached the previous day. Gold steadied on Wednesday after a surge in the dollar and U.S. bond yields in the previous session had pushed prices down 1.7 percent to their lowest this year. Tuesday's fall was the biggest since November 2016. Gold crashed below its technically important 200-day moving average and the psychologically significant $1,300 mark to $1,288.31, the weakest since Dec. 28. "Rising U.S. bond yields and a stronger dollar were factors behind gold's decline below the $1,300 level, said National Australia Bank economist John Sharma. "The slight pick up (on Wednesday) suggests there might have been some opportunistic buying on the part of investors." Spot gold was down 0.2 percent at $1,287.36 an ounce, while U.S. gold futures for June delivery were down 0.24 percent at $1,287.20.