US stock index futures rose early on Tuesday, suggesting risk demand will persist in the near term
Wall Street markets gave up early gains to finish marginally lower on Monday following a solid bounce last week. The Dow Jones Industrial Average fell 0.2%, the S&P 500 dropped 0.3%, and the Nasdaq Composite lost 0.7%. On the data front, pending home sales rose by 0.7% on a monthly basis in May following April’s decline of 4%. Meanwhile, Dallas Fed Manufacturing Index plunged to -17.7 in June from -7.3 in May, missing the market expectation of -3.1.
Asian equities entered positive territory after early declines on Tuesday. Still, investors remain cautious ahead of major central bankers’ speeches. The Shanghai Composite erased early losses to finish 0.89% higher after China announced that it would ease its Covid-19 quarantine period for overseas visitors. The Hong Kong’s benchmark Hang Seng Index rebounded by 0.82% after being down 1.1% in early deals as technology companies weakened. South Korea’s Kospi added 0.84% while the Nikkei 225 index in Tokyo advanced by 0.66%.
In Europe, stocks opened higher to start the day as risk appetite continued to pick up. The pan-European Stoxx 600 gained 0.7% in early deals, with health care stocks bucking the trend, losing 0.3%. Meanwhile, ECB policymaker Martins Kazaks said today that he expected a 25 bps rate hike in July while a 50 bps increase is the base case scenario in September. US stock index futures also rose early on Tuesday, suggesting risk demand will persist in the near term. In a wider picture, however, the upside potential for stocks remains limited as recession concerns persist.
The US dollar keeps struggling around the 104.00 figure, lacking demand amid the prevailing risk-on tone in the markets. The greenback, however, refrains from a more pronounced bearish correction at this stage as dip buyers keep the safe-haven currency. EURUSD has settled marginally below the 1.0600 mark that represents the immediate target for euro bulls at this stage. A daily close above this level would add to a more upbeat technical picture in the near term. However, the overall trend remains bearish, with USD outperforming its rivals due to the Fed’s aggressive tightening steps.