FX.co ★ Economic Worries May Lead To Weakness On Wall Street

The major U.S. index futures are currently indicating a lower open on Tuesday, suggesting that stocks may decline following a mixed performance in the previous session.

Concerns about the U.S. economic outlook are likely to impact markets after disappointing manufacturing data released yesterday. Although economic weakness might prompt the Federal Reserve to consider lowering interest rates in the near future, the central bank has indicated it plans to maintain elevated rates until there is more certainty that inflation is slowing.

A combination of a larger-than-expected economic slowdown and high interest rates could pose challenges for stocks, which have recently hit record highs.

On Friday, a significant economic indicator, the monthly jobs report, will be released by the Labor Department. This report could substantially influence both economic forecasts and interest rate expectations. Economists are predicting that the report will reveal an increase of 190,000 jobs in May, compared to 175,000 jobs in April, with the unemployment rate expected to remain at 3.9 percent.

U.S. stocks experienced a positive start on Monday but retreated into negative territory before recovering in the afternoon, ending the day mixed. The Nasdaq outperformed, closing at 16,828.67 with a gain of 93.65 points or 0.6 percent. The S&P 500 edged up 5.89 points or 0.1 percent to finish at 5,283.40, while the Dow fell by 115.29 points or 0.3 percent to 38,571.03.

Sentiment was hurt by data showing a continued contraction in manufacturing activity. According to the Institute for Supply Management (ISM), U.S. manufacturing activity unexpectedly contracted at a slightly faster rate in May, with the PMI declining to 48.7 from 49.2 in April. This contrasted with economists' expectations of a rise to 49.6. Additionally, the prices index fell to 57.0 in May from 60.9 in April, indicating a slowdown in price growth.

On Wednesday, the ISM is scheduled to release a separate report on service sector activity for May. The services PMI is anticipated to rise to 50.5 from 49.4 in April, with a reading above 50 signaling growth.

Furthermore, data from the Commerce Department showed an unexpected decline in U.S. construction spending in April, with a decrease of 0.1 percent to $2,099.0 billion from a revised $2,101.5 billion in March. This was contrary to expectations of a 0.2 percent increase following a similar decline in March.

Several stocks in the financial and energy sectors ended sharply lower, whereas Nvidia shares surged nearly 5 percent after unveiling next-generation AI chips. Autodesk rose by about 4.6 percent. Other notable gainers included Moderna, Vertex Pharmaceuticals, Dollar Tree, Micron Technology, Starbucks, Biogen, and Meta Platforms, with gains ranging from 2 to 4 percent. Salesforce.com climbed about 2.75 percent, while AstraZeneca, Warner Bros., Amazon, Merck, Boeing, and American Express posted moderate gains. On the downside, Sirius XM, Walgreens Boots Alliance, AMD, Old Dominion Freight Line, and Baker Hughes saw significant losses.

**Commodity and Currency Markets**

Crude oil futures are falling $1.15 to $73.07 a barrel after plunging $2.77 to $74.22 a barrel on Monday. Meanwhile, gold futures are declining $15 to $2,354.30 an ounce, following a $23.50 jump to $2,369.30 an ounce in the previous session.

In currency markets, the U.S. dollar is trading at 154.82 yen compared to 156.08 yen at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0865 compared to $1.0904 the previous day.

**Asia**

Asian markets ended mixed on Tuesday, with Indian stocks significantly declining due to the BJP falling below the majority mark in the Lok Sabha elections, contradicting exit polls. Losses in other regions were limited as weak U.S. data rekindled hopes for potential interest rate cuts by the Federal Reserve this year. The U.S. dollar held steady against major rivals in Asian trading following substantial losses in the New York session.

Gold prices dipped modestly, while oil prices fell by more than 1 percent, adding to a 3 percent decline in the previous session due to concerns about increased supply in 2024.

China's Shanghai Composite Index rose 0.4 percent to 3,091.20 amidst mixed signals from recent key purchasing managers index data. Hong Kong's Hang Seng Index edged up 0.2 percent to 18,444.11 following recent property sector stimulus measures. In Japan, shares fell for the first time in three sessions, with a strong yen and a safety test scandal affecting auto stocks.**Asia**

The Nikkei 225 Index dipped by 0.2% to close at 38,837.46, and the broader Topix Index fell by 0.4% to 2,787.48. Major automotive stocks struggled, with Toyota Motor losing 1.3% and Honda Motor declining by 2.2%. Conversely, Sony saw a nearly 2% rise as the buzz around its potential acquisition of the U.S. film studio Paramount Global faded.

Seoul's stock market closed lower due to profit-taking following significant gains in the previous session. The Kospi Index dropped by 0.8%, reaching 2,662.10. The financial sector was particularly hit, with KB Financial and Shinhan Financial falling by 2.1% and 3.4%, respectively.

Newly released official data showed South Korea's headline inflation decelerated to a 10-month low but remained above the central bank's 2.0% target.

In Australia, markets ended slightly down as declines in heavyweight mining and energy stocks took a toll. The benchmark S&P/ASX 200 Index slipped by 0.3% to 7,737.10, ahead of the Q1 GDP data set for release on Wednesday. The broader All Ordinaries Index closed 0.4% lower at 7,994.10.

Over in New Zealand, the S&P/NZX-50 Index inched up by 0.1% to close at 11,880.54.

**Europe**

European stocks dipped on Tuesday as investors focused on the upcoming European Central Bank meeting on Thursday and the crucial U.S. employment report set for release on Friday.

In economic updates, Germany's unemployment rate remained steady at an adjusted 3.2% in April, as revealed by a labor force survey published by Destatis. The number of unemployed slightly decreased by 1,000, or 0.1%, to 1.42 million. However, the jobless rate rose to 3.2% from 3.1% last year.

In the U.K., retail sales saw only moderate growth in May, despite a strong bank holiday weekend. The British Retail Consortium reported a 0.7% yearly increase in total retail sales, compared to a 3.9% increase in the same period last year.

German DAX Index slid by 0.6%, while France's CAC 40 Index and the U.K.'s FTSE 100 Index each declined by 0.3%.

Oil majors, including BP, Shell, Eni, and TotalEnergies, fell as oil prices continued their decline from a four-month low due to concerns about rising supply later in the year. British American Tobacco also saw a drop following its projection of declining first-half revenue and adjusted profit on an organic basis.

Wizz Air Holdings shares fell despite reporting a 2.1% rise in passenger bookings and a slight increase in load factor for May. Vistry Group also dipped after agreeing to terms with Blackstone Real Estate and Regis Group for acquiring a new build homes portfolio worth approximately £580 million.

Credit Agricole SA shares declined after its unit, Indosuez Wealth Management, finalized the acquisition of Bank Degroof Petercam without disclosing the financial terms. On a positive note, Danish shipping group Maersk saw its shares rise after raising its annual profit guidance.

**U.S. Economic Reports**

The U.S. Commerce Department is set to release its report on new orders for manufactured goods in April at 10 am ET. Expectations are for factory orders to rise by 0.6% in April following a 1.6% jump in March.

Simultaneously, at 10 am ET, the Labor Department will release its report on job openings for April. Job openings are anticipated to decline to 8.34 million in April from 8.49 million in March.