Sentiment Weak Amid Strong Domestic Manufacturing Data

(RTTNews) - The major U.S. index futures are pointing to a flat opening on Monday, with sentiment fluid amid limited catalysts that could provide direction to the markets. Earlier in the global trading day, China released some weak data points that cast doubts on the sustainability of global growth. Meanwhile, a domestic report released short while ago showed that manufacturing activity in the New York region quickened at the fastest rate since late 2009. The data could trigger anxiety concerning the Fed closing in on monetary policy normalization. The industrial production data due today could also impact the market direction.

U.S. stocks snapped their winning streak in the week ended September 12th amid a lack of major catalysts to push the markets higher. Renewed geopolitical concerns and fears of monetary policy normalization also weighed on stocks.

Last Monday, the major averages went about in a directionless manner before closing on a mixed note. The absence of any major directional cues continued to hurt stocks on Tuesday, sending them moderately lower.

Helped by a little bit of bargain hunting, the major averages rebounded moderately on Wednesday. However, with geopolitical concerns re-emerging due to the U.S. government's intent to clamp down on ISIS, the averages put on another lackluster showing on Thursday before closing narrowly mixed. Notwithstanding in-line retail sales data, stocks closed moderately lower on Friday, as geopolitical concerns intensified.

For the week ended September 12th, the Dow Industrials and the S&P 500 Index fell 0.87 percent and 1.10 percent, respectively. The Nasdaq Composite Index was down a more modest 0.33 percent.

Among the major sector indices, the NYSE Arca Oil Index, the Dow Jones Utility Average and the NYSE Arca Gold Bugs Index fell 4.05 percent, 3.26 percent and 3.97 percent, respectively for the week. Additionally, the Philadelphia Oil Service Index receded 2.63 percent and the NYSE Arca Airline Index and the Philadelphia Semiconductor Index fell over 1 percent each. On the other hand, the NYSE Arca Broker/Dealer Index and the KBW Bank Index gained 4.09 percent and 1.17 percent, respectively.

Commodity, Currency Markets

Crude oil futures are sliding $0.81 to $91.46 a barrel after falling $1.02 or 1.09 percent to $92.27 a barrel in the week ended September 12th. The commodity suffered last week due to the dollar's strength despite geopolitical tensions raising supply fears.

Last Monday, oil extended its slide, falling moderately, but rebounded marginally on Tuesday. Oil fell by over $1-a-barrel on Wednesday amid the release of the weekly inventory report. Crude rose over $1.10-a-barrel on Thursday amid geopolitical tensions but declined moderately on Friday to end the week lower.

Gold futures, which slid $35.80 or 2.82 percent to $1,231.50 an ounce last week, are currently climbing $4.70 to $1,236.20 an ounce.

Among currencies, the U.S. dollar advanced against the yen in the week ended September 12th, rising 2.14 percent to 107.34 yen, representing a fresh 6-year high. Meanwhile, the greenback edged down against the euro, losing about 0.06 percent to $1.2963.

The U.S. dollar is currently trading at 107.24 yen and is valued at $1.2918 versus the euro.

Asia

The major Asian markets retreated, with the exception of the Chinese market, as weak data released by China triggered growth concerns and the negative performance by Wall Street stocks engendered risk aversion. The Japanese market was closed for a public holiday.

Australia's All Ordinaries opened lower and fell further in early trading. Thereafter, the average moved sideways before closing down 56.90 points or 1.03 percent at 5,475.

The market witnessed broad based weakness, with real estate stocks leading the slide. Energy, financial, industrial and telecom stocks also saw notable weakness.

Hong Kong's Hang Seng Index closed at 24,357, down 238.33 points or 0.97 percent, while China's Shanghai Composite Index ended up 7.19 points or 0.31 percent at 2,339.

On the economic front, China released a trio of economic reports over the weekend that reinforced fears that the world's second largest economy is going through a phase of economic slowdown.

The Chinese National Bureau of Statistics reported that retail sales rose 11.9 percent year-over-year in August, slower than the 12.2 percent increase in July. Economists expected a 12.1 percent increase.

Meanwhile, a separate report showed that Chinese industrial output rose a less than expected 6.9 percent in August, with the pace of growth the slowest in over 5 years.

Chinese fixed asset investment climbed 16.5 percent in the January to August period compared to the 16.9 percent increase expected by economists.

A report released by the Australian Bureau of Statistics showed that new motor vehicle sales fell 1.8 percent month-over-month in August, steeper than the 1.5 percent drop in July.

Europe

European stocks opened lower and continued to trade in negative territory in early trading, as global growth fears abound amid a lack of clarity on the economic outlook. However, since then, the averages have trimmed their losses and are currently mixed.

The impending referendum in the U.K. over Scotland's independence and the looming geopolitical threats surrounding Ukraine and the Middle East are also hurting sentiment.

In corporate news, Heineken announced that SABMiller had approached the company with a possible takeover offer. However, Heineken has spurned the offer, stating that it intends to remain independent. Swedish retailer Hennes & Mauritz reported strong sales growth for the third quarter.

On the economic front, a report released by Rightmove showed that the average asking price for a home in the U.K. rose 0.9 percent month-over-month in September following a 2.9 percent decline in August. Annually, house prices rose 7.9 percent, faster than the 5.3 percent increase in July.

U.S. Economic Reports

A 2-day FOMC meeting is expected to headline the economic events of the unfolding week. Additionally, traders may also focus on the results of a couple of regional manufacturing surveys, a pair of housing market reports on housing starts and homebuilder confidence and the jobless claims report.

The Labor Department 's August producer prices report for August, the Commerce Department's current account data for the second quarter, the Conference Board's leading economic indicators index for August and announcements concerning treasury auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.

Business activity in the New York manufacturing sector has expanded at a robust pace in the month of September, according to a report released by the Federal Reserve Bank of New York, with the index of activity in the sector jumping to its highest level in almost five years.

The New York Fed said its headline general business conditions index surged up to 27.5 in September from 14.7 in August, with a positive reading indicating an increase in activity in the New York manufacturing sector. Economists had expected the index to edge up to 16.0. With the much bigger than expected increase, the general business conditions index reached its highest level since hitting 32.6 in October of 2009.

The Federal Reserve is due to release its industrial production report for August at 9:15 am ET. The consensus estimate calls for a 0.3 percent month-over-month increase in industrial output, while capacity utilization may have edged up to 92.3 percent.

In June, industrial output rose 0.4 percent month-over-month, with manufacturing output rising 1 percent. Mining output rose 0.3 percent, while utilities output fell 3.4 percent. Capacity utilization edged up 0.1 points to 79.2.

Stocks in Focus

Danaher (DHR) announced a definitive agreement to buy Switzerland's Nobel Biocare Holding for $2.2 billion in cash. The purchase would be made through a voluntary cash tender offer.

RadioShack (RSH) announced that its CFO John Feray has resigned, effective September 12, citing personal reasons. The company also announced the appointment of its long time advisor Holly Etlin as its interim CFO.

Tim Horton (THI), which has agreed to be acquired by Burger King Worldwide (BKC) reported preliminary same store sales growth of 3.6 percent for its third quarter.

Oracle (ORCL) said it has agreed to acquire content storage management solutions provider Front Porch Digital.

Riverbed Technology (RVBD) may be in focus after a federal judge upheld a jury's verdict in favor of Silver Peak Systems against Riverbed.