Commodity Weakness May Drag Markets Lower

(RTTNews) - The major U.S. index futures are pointing to a lower opening on Wednesday, with sentiment held back by a decline in commodities, which has been one of the major themes in the markets for much of the year. Prices of commodities could be considered as proxy for global growth and so weakness in the space does not bode well for the economy. The mood across the Atlantic is downbeat. The markets could also track the pending home sales data due shortly after the markets open.

U.S. stocks advanced solidly on Tuesday, with year-end buying lifting the averages, helped by the global stock market rally, rise in oil prices and a positive domestic consumer confidence reading.

The major averages opened higher and moved sideways till early afternoon trading. Thereafter, the indexes climbed steadily and ended notably higher. The Dow Industrials added 192.71 points or 1.10 percent before ending at 17,721, still down about 100 points for the year and off its all time closing high of 18,312 hit in the middle of the year.

The S&P 500 Index ended up 21.86 points or 1.06 percent at 2,078, up about 1 percent for the year. The tech-heavy Nasdaq Composite closed 66.95 points or 1.33 percent higher at 5,108.

Twenty-nine of the thirty Dow components closed higher for the year, while one stock retreated. Apple (AAPL), Boeing (BA), Cisco Systems (CSCO), DuPont (DD), IBM (IBM) and Intel (INTC) were among the best performers of the session.

Among the sectors, biotechnology, retail, financial, semiconductor and computer hardware stocks rose notably.

On the economic front, the Conference Board reported that its consumer confidence index for the U.S. rose to 96.5 in December from 90.4 in November. Economists expected a more modest improvement to 93.5. The expectations index rose 3.5 points to 83.9 and the present situation index was up 4.4 points to 115.3.

The S&P/Case-Shiller house price survey showed that their 20-city composite house price index rose a seasonally adjusted 0.9 percent month-over-month in October, ahead of the 0.6 percent increase expected by economists. In September, prices had risen 0.6 percent. The annual increase was an unadjusted 5.5 percent, the same pace of increase as in the previous month.

Currency, Commodity Markets

Crude oil futures are receding $0.99 to $36.88 a barrel after advancing $1.06 to $37.87 a barrel on Tuesday. Meanwhile, an ounce of gold is currently trading at $1,064.60, down $3.40 from the previous session's close of $1,068. On Tuesday, gold edged down $0.30.

On the currency front, the U.S. dollar is trading at 120.53 yen compared to the 120.46 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.0921 compared to yesterday's $1.0920.

Asia

The major Asian markets ended on a mixed note, with the Hong Kong, South Korean, Taiwanese, Singaporean and Indian markets ending lower, while most other markets advanced, led by the Australian market. The gains on Wall Street overnight infused some optimism into the markets, as the markets went about the penultimate session of the year.

The Japanese market advanced amid some subdued trading in the yen. The Nikkei 225 average opened higher and held above the unchanged line throughout the session before ending up 51.48 points or 0.27 percent at 19,034.

Food, retail, telecom, utility and most export stocks were among the winners in the session. On the other hand, construction, housing, chemical, pharma, mining, rubber, trading house, financial and heavy machinery stocks came under selling pressure.

Australia's All Ordinaries opened higher and rose sharply in early trading and moved roughly sideways for the rest of the session. The index added 50.80 points or 0.96 percent before ending at 5,366.

The market witnessed broad based strength, with energy, financial, healthcare, industrial and telecom stocks leading the way higher.

China's Shanghai Composite Index ended at 3,573, up 9.14 points or 0.26 percent, while Hong Kong's Hang Seng Index closed 117.47 points or 0.53 percent lower at 21,882.

Europe

European stocks opened lower and saw further downside in early trading. Since late morning trading, the averages trimmed their losses but are showing a lack of direction. The previous session's gains and oil's retreat are impacting the mood. Germany's DAX Index has fallen steeply by the mid-session.

On the economic front, data released by the U.K. Office for National Statistics showed that U.K. house prices rose the most in 8 months in December. House prices were up 0.8 percent month-over-month following the 0.1 percent gain in November. Annually, prices were up 4.5 percent.

 Money supply in the eurozone increased at a slower pace in November, the European Central Bank reported. The broad monetary aggregate M3 climbed 5.1 year-over-year in November, slower than October's 5.3 percent increase and a 5.2 percent rise forecast by economists. However, the annual growth rate of total credit to euro area residents rose to 2.7 percent in November from 2.3 percent in the previous month. Likewise, credit to the private sector increased 1.2 percent after rising 1 percent a month ago.

U.S. Economic Reports

The National Association of Realtors is due to release its pending home sales index for November at 10 am ET. Economists expect the index to increase 0.5 percent month-over-month.

Pending home sales rose 0.2 percent month-over-month in October, smaller than the 1 percent rebound expected by economists. The previous month's drop was revised to 1.6 percent from 2.3 percent. Annually, the index was up 3.9 percent. The Northeast and West saw month-over-month increases in pending home sales, while pending home sales fell in the Midwest and South.

The Energy Information Administration will release its weekly petroleum status report for the week ended 25th at 10:30 am ET.

Crude oil stockpiles fell by 5.9 million barrels to 484.80 million barrels in the week ended December 18th. Stockpiles are still near levels not seen for this time of year in at least the last 80 years.   Distillate inventories fell by 0.7 million barrels but were in the upper half of the average range for this time of the year. Meanwhile, gasoline inventories rose by 1.1 million barrels but were in the lower half of the average range.   Refinery capacity utilization averaged 92.7 percent over the four weeks ended December 18th compared to 92.9 percent over the four weeks ended December 11th.

The Treasury is set to publish the results of its auction of 7-year notes at 1 pm ET.   Stocks in Focus

Southwest Airlines (LUV) announced that it has struck a new tentative agreement with Transport Workers Union Local 555, representing more than 12,000 Southwest Ground Operations, Provisioning and Cargo Agents. If members ratify the agreement, it will become amendable in 2021.

Bridgestone announced that it will not present a counter-offer to Icahn's sweetened $18.50 per share offer for Pep Boys (PBY).

Fairchild Semiconductor (FCS) acknowledged the receipt of a revised unsolicited proposal to acquire all outstanding shares of the company for $21.70 per share in cash. The company had earlier agreed to be acquired by ON Semiconductor (ON) for $20 per share in cash.

Logitech (LOGI) said its Lifesize division has separated from the company to become a private entity under the name Lifesize Inc. Logitech would hold a 37.5 percent stake in the private entity, with three venture capital firms investing $17.5 million into Lifesize and joining Logitech as shareholders.

Fossil Group (FOSL) announced the completion of its previously announced acquisition of Misfit for $236 million, with the purchase helping the company to offer traditional timepieces and fashionable connected accessories.