Stock futures edge lower as traders test ‘bear market’ rally; Oil prices resume surge as Russian sanctions talk intensifies; Twitter shares extend surge as Musk wades in to ‘edit button’ debate; Tesla shares slip as Shanghai extends Covid lockdown and Rock, Chalk Jayhawk!: Kansas wins fourth national hoops title.
Here are five things you must know for Tuesday, April 5:
1. — Stock Futures Edge Lower As Traders Test ‘Bear Market’ Rally
U.S. equity futures edged lower Tuesday, while Treasury bond yields steadied and the dollar gave back recent gains against its global peers, as investors continue to ride a cautious rally on Wall Street.
The S&P 500 has gained more than 16.2% since reaching its 2022 nadir on March 14, even as interest rate traders continue to bet on faster, and deeper, rate hikes from the Federal Reserve and bond markets signal recession risks with an inversion of the Treasury yield curve.
At the same time, Russia’s war on Ukraine, now in its third month, is blunting sentiment in Europe and raising prices in commodity markets around the world, with Western leaders, as well as President Joe Biden, calling for tougher sanctions and potential war crimes trials for President Vladimir Putin following the discover of mass graves and civilian executions in the Ukrainian city of Bucha.
“You saw what happened in Bucha,” Biden told reporters in Washington. “This warrants him – he is a war criminal.”
The increasing tensions, Fed tightening cycle, decades-high inflation and crumbing consumer confidence hasn’t dented equity markets, however, and Ryan Detrick, chief market strategist at LPL Financial, notes that the S&P 500 has rallied for an average of 17 months following the last four yield curve inversions between 1988 and 2019.
The spread between 2-year and 10-year Treasury note yields was inverted by around 2 basis points in overnight trading, with 10-year notes at 2.44%, while the U.S. dollar index slipped 0.05% against a basket of its global peers to trade at $98.981
In Europe, a healthy reading for the region’s economic activity over the month of March — even amid the highest output prices on record — provided an early boost for stocks, with the Stoxx 600 rising 0.26% in early Frankfurt trading, while Asia stocks hit a one-month high in a follow-on rally from last night’s close on Wall Street.
In the U.S., futures contracts tied to the Dow Jones Industrial Average indicating a modest 50 point opening bell gain while those linked the S&P 500 are are priced for a 7 point move to the downside. Futures linked to the tech-focused Nasdaq are looking at a 20 point opening bell dip.
2. — Oil Prices Resume Surge As Russian Sanctions Talk Intensifies
Global oil markets marched higher again Tuesday, pulling U.S. crude closer to $105 per barrel, as western leaders mulled deeper sanctions on Russia and Saudi Arabia raises its selling prices for all export grades heading into the spring.
The reported atrocities in the city of Bucha, as well as ongoing discoveries of civilian executions by Russian troops in Ukraine, have accelerated calls for renewed sanctions on Russia, including an EU push to target energy exports from Moscow.
Saudi Arabia has also boosted its crude selling prices in Asia by $4.40 per barrel, taking it to a record $9.35 per barrel over the global benchmark, for deliveries in the month o May. The U.S. increase was $2.20 per barrel.
The attention has turned from the price negative impact of barrels being released from strategic reserves and a lockdown-related slowdown in Chinese demand to the prospect for fresh sanctions against Russia, potentially containing curbs on energy,” said Ole Hansen, head of commodity strategy at Saxo Bank.
WTI futures for May delivery were marked $1.82 higher in overnight trading at $105.10 per barrel while Brent contracts for June rose $1.74 to $109.26 per barrel.
3. — Twitter Shares Extend Surge As Musk Wades In to ‘Edit Button’ Debate
Twitter (TWTR) – Get Twitter, Inc. Report shares extended gains in pre-market trading as the micro-blogging website’s newest investors, billionaire Tesla CEO Elon Musk, suggested his stake in the group will be far more ‘hands-on’ than first anticipated.
Musk, who revealed a “passive” 9.2% stake in the group through a Securities and Exchange Commission filing yesterday, pushed poll to his 80.4 million Twitter follows shortly after, asking if they would like to see an edit feature added to the website.
Twitter CEO Parag Agrawal, who recently took over from the departing founder Jack Dorsey, asked Twitter users to “vote carefully”, adding that “the consequences of this poll will be important” in a move that clearly suggests Musk’s views are being actively considered by Twitter executives.
At last count, 73.5% of the 2.5 million people who voted in the poll had selected “yes” to Musk’s edit feature question.
Twitter shares were marked 3.1% higher in pre-market trading to indicate an opening bell price of $51.51 each.
4. — Tesla Shares Slip As Shanghai Extends Covid Lockdown
Tesla (TSLA) – Get Tesla Inc Report shares bumped lower in pre-market trading as authorities in Shanghai extended lockdown orders in China’s biggest city, potentially extending the closure of the carmaker’s workhorse gigafactory.
With Covid cases in the city of 26 million surging past 13,000 — the highest in two years — Shanghai officials extended their nine-day lockdown order, while ramping up testing and vaccinations, to nearly all parts of the country’s financial hub.
Tesla, meanwhile, will likely need to prolong the closures of its Shanghai factory, which has been dark since March 28, as restrictions on travel in and out of the city intensify. The plant produces around 16,000 cars a week.
Tesla delivered 310,048 new cars over the three months ending in March, the company said in a statement, up 67.8% from last year but just 0.5% higher than the 308,600 reached in the final three months of last year.
Production actually fell, however, to 305,407 vehicles compared to the 305,840 tally recorded over the final three months of last year, thanks in part to supply chain disruptions and Covid-related closures at its Shanghai factory.
Tesla shares were marked 0.75% lower in pre-market trading to indicate an opening bell price of $1,137.01 each.
5. — Rock, Chalk Jayhawk!
In the biggest comeback in NCAA finals history, the Kansas Jayhawks erased a 16 point deficit to outpace the University of North Carolina Tar Heels and win the school’s fourth national championship last night in New Orleans.
Kansas, which stormed to a 7-0 lead in the opening minutes of the game, nonetheless trailed by 15 heading into halftime as North Carolina capitalized on some cold shooting from Jayhawk guards. A 20-6 run to start the second half, however, as well as a dry spell from the field from injured UNC star Armando Bacot, helped seal the Jayhawks victory.
“We were disappointed with how we played at halftime,” said coach Bill Self, who secured his second national championship since taking over from Roy Williams in 2003. “I told them, ‘Would you rather be down 15 points at halftime or nine with [two minutes] left?’ because that’s what happened in ’08. They all said 15.”
