Sentiment Weak Ahead Of Housing Data

(RTTNews) - The major U.S. index futures are pointing to a lower opening on Monday, with sentiment suggesting nervousness of traders amid dwindling hopes concerning the global economic recovery. Casting doubts on the recovery's strength, rumors are adrift that China may soon scale back its economic growth forecast. Meanwhile, the results of Chicago Federal Reserve's national manufacturing survey showed an unexpected contraction in activity. Traders may now look ahead to the U.S. existing home sales data for additional clarity.

U.S. stocks resumed their climb in the week ended September 19th, as monetary and economic fears receded amid the FOMC decision that failed to send a clear signal concerning the itinerary for monetary policy normalization.

Last Monday, the major averages moved about in a tentative manner amid monetary policy fears and the lack of any major directional cues before ending mixed. A rally in commodities prices amid a pullback by the dollar helped the major averages advance moderately on Tuesday.

Despite the FOMC meeting not giving any decisive clue on the course of monetary policy, the major averages closed a lackluster session modestly higher on Wednesday. With the Fed decision and fears concerning monetary policy normalization behind, stocks launched into a rally on Thursday. Although Scotland's decision to remain in the U.K. triggered early strength on Friday, the averages went about in a lackadaisical manner before closing mixed.

For the week ended September 19th, the Dow Industrials and the S&P 500 Index gained 1.72 percent and 1.25 percent, respectively, while the Nasdaq Composite added 0.27 percent.

Among the sector indexes, the Dow Jones Transportation Average, the Dow Jones Utility Average, NYSE Arca Oil Index, the KBW Bank Index and the Philadelphia Semiconductor Index all ended up about 1 percent for the week. On the other hand, the NYSE Arca Gold Bugs Index tumbled 4.80 percent and the NYSE Arca Airline Index declined 1.12 percent.

Currency, Commodity Markets

Crude oil futures are edging down $0.05 to $91.60 a barrel after ticking up $0.14 or 0.15 percent to $92.41 a barrel in the week ended September 19th.

Last Monday, oil rebounded moderately amid upbeat U.S. manufacturing activity data. The commodity rallied close to $2-a-barrel on Tuesday amid the dollar's pullback.

Oil retreated moderately on Wednesday amid the FOMC decision and the release of the weekly petroleum status report. The commodity fell by $1.35-a-barrel on Thursday and extended its declines by a moderate margin on Friday, although it finished the week modestly higher.

Gold futures, which fell $14.90 or 1.21 percent to $1,216.60 an ounce in the previous week, are currently slipping $1.20 to $1,215.40 an ounce.

Among currencies, the dollar extended its gains against most other major currencies in the week ended September 19th amid expectations that stronger U.S. data will lead the Federal Reserve to tighten rates, resulting in monetary policy divergence. The dollar rallied 1.58 percent against the yen before ending the week at 109.04 yen. Additionally, the greenback gained 1.034 percent against the euro to $1.2829.

The U.S. dollar is currently trading at 108.97 yen and is valued at $1.2855 versus the euro.

Asia

The major Asian markets fell across the board, unimpressed by the lackluster mood on Wall Street last Friday. The New Zealand market bucked the downtrend with a 1.06 percent rally after the National Party-led by John Key was re-elected in the parliamentary elections.

The modest recovery by the yen hurt the prospects of Japanese stocks, with the Nikkei 225 average opening lower and declined steadily in the morning. Thereafter, the average moved roughly sideways before closing down 115.27 points or 0.71 percent at 16,206.

The market witnessed broad based weakness, with export and resource stocks bearing the brunt of the selling pressure.

Australia's All Ordinaries opened almost flat with a positive bias but declined steadily throughout the session. The index closed 69.10 points or 1.27 percent lower at 5,368. Financial, industrial, material and telecom stocks led the retreat.

Hong Kong's Hang Seng Index closed at 23,955, down 350.67 points or 1.44 percent, and China's Shanghai Composite ended 39.59 points or 1.70 percent lower at 2,290.

Europe

European stocks opened notably lower but have trimmed their losses over the course of the morning. Nevertheless, the averages are trading lower.

In corporate news, Siemens (SI) announced a deal to buy oilfield equipment maker Dresser-Rand (DRC) for $7.6 billion. Meanwhile, Bosch and Siemens announced that Bosch will acquire Siemens' 50 percent stake in their joint venture BSH for 3 billion euros.

Tesco stated that it has overstated its profit forecast for the first half of the year by about 250 million pounds. The company added that it would look into the impact this would have on the full year.

U.S. Economic Reports

Housing and manufacturing data are among the key economic reports scheduled to be released in the unfolding week. Traders are likely to focus on the National Association of Realtors' existing home sales report for August, the Commerce Department's new home sales report for August, the Federal House Finance Agency's house price index for July, the weekly jobless claims report, the Commerce Department's durable goods orders report for August, and final results of the September consumer sentiment survey by Reuters and the University of Michigan.

Flash estimates of Markit's manufacturing and non-manufacturing indexes for September and several Fed speeches are also likely to be in the spotlight. The results of some regional manufacturing surveys, the final second GDP estimate, and Treasury auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.

The Chicago Federal Reserve's national activity index for slipped to -0.21 in August from 0.39 in July. Economists expected a more modest drop to 0.35.

The National Association of Realtors is due to release its existing home sales data at 10 am ET. Economists expect existing home sales to come in at a seasonally adjusted annual rate of 5.18 million units.

Existing home sales rose 2.4 percent month-over-month in July to a seasonally adjusted annual rate of 5.15 million units, the best level since September 2013. Sales rose in the South, West and the Midwest, while sales were unchanged in the Northeast. The median price of an existing home was up 4.9 percent year-over-year to $222,900 in July. Inventories measured in terms of months of supply were unchanged at 5.5 months.

New York Fed President William Dudley will take part in a conversation at a conference in New York at 10:05 am ET. Minneapolis Fed President Narayana Kocherlakota is due to speak on monetary policy objectives in Marquette, Michigan at 7:30 pm ET.

Stocks in Focus

United Rentals (URI) announced that it has been added as a component of the S&P 500 Index, effective after the close of trading last Friday.

Boeing (BA) announced that Ethiopian Airlines has placed an order for twenty 737 MAX 8s, which is valued at more than $2.1 billion at list prices and also includes options and purchase rights for an additional fifteen 737 MAX 8s. The company noted that the order was previously unidentified on its orders & deliveries website.

Apple (AAPL) announced that it has sold over 10 million new iPhone 6 and new iPhone 6 Plus models in three days of launch on September 19.

Clorox (CLX) announced that it is discontinuing operations at its Venezuelan unit, effective immediately and is seeking to sell its assets. The company also confirmed its 2015 financial guidance that calls for flat sales and earnings per share from continuing operations of $4.35-$4.50, in line with estimates.

InterMune (ITMN) announced that it has entered into a MoU to settle litigation in the Delaware Court of Chancery relating to its agreement and plan of merger dated August 22, 2014. The company has agreed to be bought by Swiss drug giant Roche.