U.S. stock index futures hovered around the flatline Monday, the first day of the month, as traders assessed the takeover of failed bank First Republic. Futures tied to the Dow were up 5 points, or 0.01%, while S&P 500 and Nasdaq-100 futures fell 0.06% and 0.13%, respectively. JPMorgan Chase has acquired all of troubled lender First Republic’s deposits and a “substantial majority of assets,” according to a release. JPMorgan’s shares rose more than 4% in premarket trading on the news. “This takes away the uncertainty for the market,” Sarat Sethi, managing partner at DCLA, told CNBC’s “Worldwide Exchange” on Monday. “What you’ve seen now is an agreement where depositors will be taken over, and you’ve got some type of guarantee there. That’s important for the market because, you don’t want to see this kind of thing unravel.” First Republic reported last week that deposits tumbled more than 40% in the first quarter, triggering further declines in the already struggling stock. Shares have cratered 97% since the start of the year. Stocks are coming off a winning week and month. For April, the Dow gained 2.5% to notch its best monthly stretch since January, while the benchmark index gained 1.5%. The tech-heavy index posted marginal gains. Earnings reports from major tech companies dominated much of last week’s market debate, fueling the narrative that earnings are faring better-than-feared, despite many widespread macroeconomic concerns. So far, a little over half of S&P 500 companies have reported earnings, with more than 79% and about 72% surpassing earnings and sales expectations, respectively. First-quarter earnings are currently on track to fall 3.7% for the period, a smaller drop than the 6.7% decline projected on March 31, according to FactSet. Monday kicks off another busy week for earnings, with results from Norwegian Cruise Line and MGM Resorts. Reports from Pfizer, Starbucks, Advanced Micro Devices and CVS Health are due out later in the week. Wall Street also awaits ISM manufacturing data, construction spending and S&P Global manufacturing PMI on Monday. April’s nonfarm payrolls report is on deck Friday. Australian and Japanese markets are both trading higher even as most Asian markets are closed for the Labor Day holiday Monday. In Japan, the Nikkei 225 was 0.92% higher to end the day at 29,123.18, while the Topix was up 1% to finish at 2,078.06. Japan’s purchasing managers index for April came in at 49.5, its softest contraction in six months, according to the au Jibun bank. Australia’s S&P/ASX 200 rose 0.35% and closed at 7,334.6, as the country saw its factory activity in April contracting at its fastest pace in 35 months, with private surveys from Juno Bank showing its purchasing managers index standing at 48. Oil fell on Monday as concern over the economic impact of the U.S. Federal Reserve potentially raising interest rates and weaker Chinese manufacturing data outweighed support from new OPEC+ supply cuts taking effect this month. The Fed, which meets on May 2-3, is expected to increase interest rates by another 25 basis points. The U.S. dollar rose against a basket of currencies on Monday, making oil more expensive for other currency holders. “The prospect of further rate hikes to be announced by the Fed this week is expected to drive an increase in near-term price volatility,” said Baden Moore, head of commodity and carbon strategy at National Australia Bank (NAB). Brent crude fell $1.64, or 2.0%, to $78.69 a barrel, while U.S. West Texas Intermediate (WTI) crude slid $1.66, or 2.2%, to trade at $75.12. Gold prices eased on Monday as the U.S. dollar held firm, with cautious traders awaiting the Federal Reserve’s interest rate hike decision later this week. Spot gold fell 0.2% to $1,986.63 per ounce. U.S. gold futures shed 0.2% to $1,995.30. The dollar index rose 0.2%, making greenback-priced bullion more expensive for overseas buyers.
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