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Upward Momentum May Lead To Continued Strength On Wall Street

The major U.S. index futures are pointing to a higher opening on Tuesday, with stocks likely to extend the upward trend seen over the past few sessions.

The markets may benefit from recent upward momentum, which has lifted the Nasdaq and the S&P 500 to their best levels in over five months.

Optimism about U.S.-China trade talks has contributed to the buying interest on Wall Street along with indications the U.S. economy is holding up relatively well amid a global slowdown.

Trading activity may remain somewhat subdued, however, as the Federal Reserve’s upcoming monetary policy decision is likely to keep some traders on the sidelines.

Stocks fluctuated over the course of the trading day on Monday but maintained a positive bias throughout much of the session. The Nasdaq and the S&P 500 eventually ended the session at their best closing levels in over five months.

The major averages all closed in positive territory, adding to last week’s gains. The Dow rose 65.23 points or 0.3 percent to 25,914.10, the Nasdaq climbed 25.95 points or 0.3 percent to 7,714.48 and the S&P 500 advanced 10.46 points or 0.4 percent to 2,832.94.

The strength on Wall Street reflected continued optimism about a U.S.-China trade deal after China’s state-owned Xinhua news agency reporting the U.S. and China have made further “concrete progress” on the text of a final agreement.

News on the merger-and-acquisition front added to the positive sentiment, as Deutsche Bank (DB) and rival German bank Commerzbank confirmed they are in merger talks.

Buying interest was somewhat subdued, however, as traders seemed reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement later this week.

The Fed is widely expected to leave interest rates unchanged, although traders are likely to keep a close eye on the accompanying statement for clues about the outlook for rates.

The central bank’s economic projections and Fed Chairman Jerome Powell’s subsequent press conference are also likely to be in focus.

On the U.S. economic front, a report from the National Association of Home Builders showed homebuilder confidence has held steady in the month of March.

The report said the NAHB/Wells Fargo Housing Market Index came in at 62 in March, unchanged from February. Economists had expected the index to inch up to 63.

“Builders report the market is stabilizing following the slowdown at the end of 2018 and they anticipate a solid spring home buying season,” said NAHB Chairman Greg Ugalde.

Despite the fluctuations by the broader markets, oil service stocks saw substantial strength throughout the trading session. Reflecting the strength in the sector, the Philadelphia Oil Service Index spiked by 3.9 percent. The rally by oil service stocks came amid an increase by the price of crude oil.

Considerable strength also emerged among natural gas stocks, as reflected by the 2.2 percent jump by the NYSE Arca Natural Gas Index.

Steel, financial, and retail stocks also moved notably higher over the course of the session, while significant weakness was visible among gold stocks.

Commodity, Currency Markets

Crude oil futures are rising $0.28 to $59.37 barrel after climbing $0.57 to $59.09 a barrel on Monday. Meanwhile, after slipping $1.40 to $1,301.50 ounce in the previous session, gold futures are advancing $7.50 to $1,309 an ounce.

On the currency front, the U.S. dollar is trading at 111.37 yen compared to the 111.43 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1352 compared to yesterday’s $1.1337.

Asia

Asian stocks ended broadly lower on Tuesday as investors awaited a slew of central bank decisions scheduled for the week.

The U.S. Federal Reserve kicks off its two-day monetary policy meeting later in the day, while the Bank of England announces its interest rate decision on Thursday.

In Asia, central banks in Indonesia, the Philippines, Taiwan and Thailand all have monetary policy meetings this week.

Chinese shares fell on profit taking after a recent string of gains on hopes for continued government support to boost growth.

The benchmark Shanghai Composite Index dipped 5.44 points or 0.2 percent to 3,090.98, although Hong Kong’s Hang Seng Index edged up 57.27 points or 0.2 percent to 29,466.28.

Japanese shares edged lower as the yen firmed up against the dollar ahead of the Fed and BoE meetings this week. The Nikkei 225 Index slipped 17.65 points or 0.1 percent to 21,566.85, while the broader Topix ended down 3.45 points at 1,610.23.

Exporters Canon, Sony and Panasonic fell between 0.4 percent and 0.7 percent as the dollar weakened against the yen for a third straight session. Online fashion retailer Zozo Inc. plunged 11.3 percent after a brokerage downgrade.

Meanwhile, rising U.S. yields pushed financials higher, with Sumitomo Mitsui Financial and Dai-ichi Life gaining around 1 percent. Japan Display Inc. jumped 7.3 percent after Singapore-based fund Effissimo said it is eager to offer suggestions to management.

Japanese industrial output fell a seasonally adjusted 3.4 percent month-on-month in January compared to the 3.7 percent decline estimated earlier, a government report showed.

Australian markets fluctuated before finishing marginally lower as losses in the healthcare sector offset gains among miners.

The benchmark S&P/ASX 200 Index edged down 5.70 points or 0.1 percent to 6,184.80, while the broader All Ordinaries Index slipped 7.00 points or 0.1 percent to 6,276.60.

New Hope Corp. plunged 11.8 percent after the coal miner reported a 4 percent increase in its half-year net profit.

Biopharmaceutical firm CSL dropped 1.6 percent and hearing implant maker Cochlear declined 1.8 percent as the U.S. dollar hovered near a two-week low amid bets for a dovish Fed.

Westpac Banking Corp. slid 0.4 percent after the bank decided to sell its personal finance advice business. The other three big banks fell between 0.4 percent and 0.7 percent.

Meanwhile, mining heavyweights BHP and Rio Tinto climbed around 1.7 percent as iron ore prices rose across the board on supply concerns after Brazilian miner Vale SA announced further production cuts.

In economic news, minutes from the Reserve Bank of Australia’s March meeting noted “significant uncertainties” over the state of the economy.

Separately, a government report showed that house prices in Australia were down 2.4 percent sequentially in the fourth quarter of 2018, missing expectations for a decrease of 2.0 percent.

Seoul stocks ended little changed with a negative bias as investors awaited the outcome of the Federal Reserve meeting to see if the U.S. central bank would stick to its pledge of a “patient” approach to monetary policy.

Europe

European stocks have risen on Tuesday to extend gains from the previous session, as investors watch the latest developments on the Brexit front and look ahead to the Fed and BoE policy meetings this week for clues about the likely path of global interest rates.

After the speaker of Britain’s parliament banned another vote on the same Brexit deal, Brexit Secretary Steve Barclay said that Prime Minister Theresa May’s Brexit divorce deal would probably not be put to a vote in the British parliament this week.

While the German DAX Index has jumped by 1.1 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are up by 0.6 percent and 0.5 percent, respectively.

Higher copper prices have helped lift mining stocks, with Anglo American and Rio Tinto moving notably higher and Antofagasta showing an even more significant increase.

Sainsbury’s has also rallied in London. The Financial Times reported that the U.K. grocer and Walmart’s Asda would provide a more specific commitment to cut prices in a bid to save their proposed tie-up.

Online supermarket Ocado has also jumped after it unveiled plans to establish an office in the Washington, D.C. metro area for its Ocado Solutions technology business.

AXA has edged higher after the French insurer said it would reduce its stake in AXA Equitable Holdings through a secondary offering.

U.S. Economic Reports

At 10 am ET, the Commerce Department is scheduled to release its report on factory orders in the month of January. Factory orders are expected to rise by 0.3 percent in January after inching up by 0.1 percent in December.

Stocks In Focus

Shares of Tilray (TLRY) are moving notably higher in pre-market trading after the Canadian cannabis company reported fourth quarter revenues that exceeded analyst estimates.

Tilray President and CEO Brendan Kennedy said the company made significant progress on its long-term initiatives, including increasing production capacity, expanding and strengthening strategic partnerships, and acquiring complementary businesses.

Brazilian payments firm StoneCo (STNE) is also seeing substantial pre-market strength after reporting significant fourth quarter adjusted net income and revenue growth.

Shares of The Michaels Companies (MIK) may also see initial strength after the arts and crafts retailer reported fiscal fourth quarter results that beat expectations on both the top and bottom lines.

On the other hand, shares of Del Taco (TACO) are moving to the downside in pre-market trading after the restaurant chain reported fourth quarter earnings just below analyst estimates.

Footwear and accessories retailer DSW Inc. (DSW) may also come under pressure after reporting an unexpected fiscal fourth quarter loss on weaker than expected revenues.

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