FX.co ★ Futures Pointing To Roughly Flat Open On Wall Street

U.S. index futures are indicating a flat opening on Tuesday, as the stock market shows signs of consolidating after its recent upward trajectory in the wake of former President Donald Trump’s re-election victory. This positive sentiment on Wall Street has elevated major indices to record levels, driven by expectations of a pro-business approach that may aid economic growth, notwithstanding some concerns around proposed tariff hikes and their potential inflationary impact.

The week ahead is light on major economic data which might leave traders hesitant, pending key statistical releases in the coming days that could offer insights into inflation trends and economic strength. Wednesday will bring a closely watched report on consumer price inflation, followed later by data on producer price inflation, retail sales, and industrial output, all of which are likely to draw investor focus.

On Monday, U.S. stocks ended on a strong note. The Dow Jones Industrial Average and the S&P 500 both reached new milestone highs, while the Nasdaq remained relatively unchanged due to a lackluster performance in the technology sector. This buoyancy in the markets is attributed to investor optimism regarding Trump's policies focused on tax cuts and deregulation, expected to spur higher corporate earnings.

Despite the positive market sentiment, trading volumes were subdued, partly due to absence of significant economic data. Traders are anticipated to closely monitor the forthcoming economic reports concerning consumer and producer price inflation, as well as retail sales and industrial production figures set to be released this week.

During Monday's session, the Dow peaked at 44,486.70 before slightly paring its gains, closing at 44,293.13 with a gain of 304.14 points or 0.7%. The S&P 500 added 5.81 points or 0.1%, closing at 6,001.35, after having established a fresh peak of 6,017.31 earlier in the day. Meanwhile, the Nasdaq, which spent most of its trading day in negative territory, managed a modest increase of 11.99 points or 0.1%, closing at 19,298.76.

Significant movements included a nearly 9% surge in Tesla's stock price. Salesforce saw a rise of over 6%, while PayPal advanced by 4.7%. Starbucks ended the day 3.2% higher, with Airbnb gaining 2.7%. Other notable gains of 1 to 2.5% were recorded by companies like American Express, Goldman Sachs, United Health, JPMorgan Chase, Walt Disney, Alphabet, Home Depot, Mastercard, Cisco, Visa, Bank of America, Netflix, and Nike.

Conversely, Apple Inc., Analog Devices, Micron Technology, and Intel experienced declines. Moderna dropped approximately 7%, and other major players like Merck, Boeing, Nvidia, Amazon, and Microsoft also closed on a negative note.

**Commodities and Currency Markets**

Crude oil futures are slightly higher, up $0.56 to $68.60 a barrel, recovering partially after a significant drop by $2.34 to $68.04 the previous day. Gold futures are modestly increasing by $0.90 to $2,618.60 an ounce, rebounding after a sharp $77.10 decrease to $2,617.70 an ounce.

In the currency market, the U.S. dollar has strengthened to 154.33 yen from 153.72 yen at Monday’s close in New York. Against the euro, the dollar has appreciated to $1.0619, up from the prior day's $1.0655.

**Asia Markets**

Asian markets exhibited a downward trend on Tuesday, primarily led by declines in Chinese and Hong Kong indices, as investors remain cautious about former President Trump’s economic and policy directions, particularly concerning immigration and foreign relations.

Gold hovered around a one-month low, pressured by dollar strength amid expectations of prolonged elevated U.S. interest rates. Oil prices continued their downward streak for a third consecutive session due to limited demand prospects in China.

The Shanghai Composite Index in China dropped 1.4% to 3,421.97, and the Chinese yuan weakened amidst heightened concerns over U.S.-China relations following Trump’s potential appointments in his new administration. Reports suggest Trump’s inclination to nominate pro-India Congressman Michael Waltz as National Security Adviser and foreign policy strategist Marco Rubio as Secretary of State, with a focus on strengthening U.S.-India ties and countering Chinese influence in the Indo-Pacific region.

Hong Kong’s Hang Seng Index fell sharply by 2.84% to 19,846.88, despite speculation that China is contemplating tax reductions on home purchases to stimulate the sluggish housing market.

Japanese markets showed mixed outcomes following Prime Minister Shigeru Ishiba's promise of over $65 billion in support for the country's semiconductor and AI sectors over the next decade. The Nikkei 225 Index slid 0.4% to 39,376.09, whereas the broader Topix Index edged marginally higher to 2,741.52. While financials and automakers featured among gainers, Tokyo Electron and SoftBank Group declined ahead of their earnings announcements post-market close.Seoul's stock market experienced a significant downturn, with the Kospi index closing at 2,482.57, marking a 1.9 percent decrease. Shares of Samsung Electronics fell by 3.6 percent, while SK Hynix saw a 3.5 percent drop, following reports that the U.S. has instructed Taiwan Semiconductor Manufacturing (TSM) to cease its delivery of advanced chips to China.

Australian stock markets concluded slightly lower, primarily weighed down by a decline in mining and energy stocks due to underwhelming stimulus measures from China. The S&P/ASX 200 Index edged down by 0.1 percent, settling at 8,255.60. Meanwhile, the All Ordinaries Index closed marginally lower at 8,515.20.

In contrast, New Zealand saw its benchmark S&P/NZX-50 Index gain 0.5 percent, reaching 12,749.36.

**European Markets**

On Tuesday, European stocks faced downward pressure, influenced by reports concerning U.S. President-elect Donald Trump's anticipated appointments. Michael Waltz is expected to become the new National Security Adviser, while Marco Rubio is poised to take on the role of Secretary of State, suggesting a firm stance on matters involving China, Iran, and Venezuela.

Additionally, information from data provider DDHQ indicates that Trump's Republican Party has secured a majority in the U.S. House of Representatives, pointing to Republican dominance across both congressional chambers. Concerns are mounting that Trump's aggressive tariff policies could spur inflation and deter the Federal Reserve from implementing rate cuts. Such tariffs also risk eliciting retaliatory measures from key trading partners.

Attention is directed towards upcoming U.S. consumer price inflation data set to be released on Wednesday, alongside multiple speeches from Federal Reserve officials throughout the week, including remarks from Fed Chair Jerome Powell on Thursday.

In the European markets, the French CAC 40 Index saw a 1.5 percent decline, the German DAX Index dropped by 1.2 percent, and the UK's FTSE 100 Index decreased by 1.0 percent.

On the corporate front, German chemical giant Bayer suffered a notable drop after revising its full-year operating earnings guidance downward. Similarly, chipmaker Infineon saw its stock fall following a reduction in its sales projections for the fiscal year 2025. Shares of Vodafone also declined due to the British telecoms company's revenue dip in its primary market, Germany.

Conversely, DCC's shares surged upon announcing its intention to divest its healthcare division and explore strategic alternatives for its technology business.

**U.S. Economic Developments**

Neel Kashkari, President of the Minneapolis Federal Reserve, is slated to attend the Yahoo Finance Invest 2024 "New Challenges, New Opportunities" conference, commencing at 2 pm ET. Later, at 5 pm ET, Patrick Harker, President of the Philadelphia Federal Reserve, will address the topic "Fintech, AI, and the Changing Financial Landscape" during the Carnegie Mellon University Lecture Series.