Via Dave Lutz at JonesTrading, here’s what traders are talking about before markets open on Tuesday.
Good Morning! US futures are rebounding from the S&P’s five day, 2.9% losing streak. The S&P and Nasdaq are gaining 50bp as overnight headers grew less dire (Slew of M&A in EU, Earnings and China “only” losing 1.2%). EU markets are all higher, led by a 1.5% in the DAX after yesterday’s smackdown. Luxury stocks Kering and Luxottica #s helping sentiment, as consumer discretionary leads the rally, gaining nearly 2% on average. Fins, HC, Materials and Industrials are all up 1%+, while only Tech is lagging the rally. Volumes are decent for a Summer Tuesday, with the DAX trading 40% heavier than normal. The one headache for Europe remains Greece, and we see their bonds getting hit again this AM as the GREK ETF takes out post-halt lows. Over in Asia, the Shanghai Composite is following up its biggest one-day fall since February 2007, with another 1.7% drop, having at one point been down 5% – with heavy buying of shares in state-owned banks helped pulling it off lows. Smaller caps fared worse, with Shenzen off 22%+ and the the tech-heavy ChiNext fells 3.8%. Tokyo’s Nikkei 225 finished basically flat while Hang Seng rose 60bp. Aussie lost small, as Fins and Energy helped offset losses in the Miners
The Fed begins a two-day policy meeting Tuesday and will release its statement on interest rates at 2 p.m. EDT Wednesday (No Presser) — and the US 10YY has rebounded 4bp to test yesterday’s pre-market highs, while bunds are seeing some pretty heavy pressure this AM. The DXY is rebounding, and giving the correlation with equities, helping the S&P recover. Gains are being made against both Euro and Yen, while growth proxies are having a better day — Aussie $US is in rally mode and Copper adding 1% early. Eyes remain on Gold, which has failed an upside $US1100 break this AM as short-covering gets exhausted, and the stronger $US weighs. The Energy complex is showing no life, as Brent breaks further into a bear market, losing 1.5%, and driving both Brent and WTI towards a test of March lows.
Scheduled Catalysts today include S&P Case-Shiller at 9, followed by Consumer Confidence and Richmond Fed at 10. We get API inventories after the close. In Washington today, the Senate continues debate on highway bill; Senate Banking Cmte holds hearing on lifting crude oil export ban with Senate Energy and Natural Resources Cmte Chairman Lisa Murkowski at 9:30am; John Kerry and Jack Lew testify to House Foreign Affairs Committee on Iranian nuclear deal at 10 right when GOP leaders speak after having a closed conference