Dow Futures Gain, Dollar Slumps as Inflation Bets Fade; Walmart In Focus

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The Tuesday Market Minute

  • Global stocks power higher as re-opening bets and the ongoing rotation into value stocks offsets persistent inflation concerns.
  • BofA’s Fund Managers’ Survey tabs inflation risk and taper tantrum as key market risks ahead of tomorrow’s April Fed minutes.
  • Global oil prices trade past the $70 mark for the first time since mid-March as traders re-set energy demand bets amid multiple re-openings in Europe.
  • Benchmark 10-year Treasury note yields hold at 1.654% while the dollar index slumps 0.4% to a near three-year low of 89.787.
  • CDC data shows 123.8 million Americans have now been fully vaccinated against the coronavirus, with around 274.4. million doses administered as of Monday.
  • U.S. equity futures suggest a firmer open on Wall Street ahead of first quarter earnings from Walmart and Home Depot and April housing starts data at 8:30 am Eastern time.

Wall Street futures moved higher Tuesday, while the dollar tested three-year lows and oil prices jumped past $70 as investors looked to extend bets on the reopening of major economies around the world while shrugging off, for the moment at least, near-term concerns over quickening inflation.

© TheStreet Dow Futures Gain, Dollar Slumps as Inflation Bets Fade; Walmart In Focus

With the CBOE’s benchmark gauge of market volatility, the VIX, dropping back below the key 20 point level, and benchmark 10-year not yields holding at 1.65% in overnight trading, stock futures have a clean path into the Tuesday open from which to walk through March quarter earnings from Walmart and Home Depot as well as housing starts data at 8:30 am Eastern time.

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The tamer market backdrop belies a persistent worry over faster inflation – a concern that could be addressed from today’s retail-focused earnings following April’s headline CPI reading of 4.2%. In fact, this month’s closely watched fund mangers’ survey from Bank of America suggests inflation, as well as any reaction from the Federal Reserve’s decision to slow the pace of monthly bond purchases, remain the market’s two biggest risk.

Clues to the latter will be provided by minutes from the Fed’s April interest rate meeting tomorrow and public comments later today from Dallas Fed President Robert Kaplan and Atlanta Fed President Ralph Bostic.

Curiously, even with the elevated inflation risk, the U.S. dollar index is testing three-year lows on foreign exchange markets Tuesday, falling 0.43% to 89.777 against a basket of its global peers.

In the meantime, Wall Street looks set for a solid open Tuesday with contracts tied to the Dow Jones Industrial Average priced for an 65 point opening bell gain and those linked to the S&P 500 indicating a 12 point advance.

Tech stocks, too, are on the move, with Nasdaq Composite futures suggesting a 100 point opening bell advance.

AT&T shares were a notable pre-market mover, falling more than 3.7% to $30.20 each after unveiling a sharp dividend cut amid the details if its planned $43 billion media asset merger with Discovery .

Ford Motor Co. and General Motors were also active, rising 1.9% and 0.9% respectively, after Japan’s Toyota Motor Co. hit a record high in Tokyo trading amid optimism that traditional automakers can weather the global semiconductor shortage.

Oil prices were bouncing higher Tuesday, as well, as traders gauged energy demand tied to the re-opening of key economies in Europe and looked to today’s API stock data to assess the impact of last week’s Colonial Pipeline shutdown.

WTI futures contracts for June delivery were marked 50 cents higher at $66.77 per barrel while Brent contracts for July, the global benchmark, traded 61 cents higher at $70.07 per barrel.

Overnight in Asia, stocks jumped notably higher following last night’s positive close on Wall Street, with the Nikkei 225 rising 2.09% to close at 28,406.84 points while the region-wide MSCI ex-Japan benchmark rose 1.67% into the final hours of trading.

In Europe, Germany’s DAX performance index hit a fresh intra-day record high as stocks powered ahead on region re-opening bets, with gains capped by a firmer euro.

The Stoxx 600 was marked 0.41% higher in early Frankfurt trading, while Britain’s FTSE 100 gained 0.44% in London.

This article was originally published by TheStreet.

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