Profit Taking May Lead To Early Weakness On Wall Street

The major U.S. index futures are pointing to a lower opening on Monday, with stock likely to give back some ground following recent strength. Traders may look to cash in on some of the recent gains, which once again lifted the major averages to new record closing highs last Friday.

Trepidation ahead of a key OPEC meeting later this week may also weigh on the markets amid uncertainty about whether the members of the cartel will manage to finalize an agreement on reducing oil production.

Recent optimism about the outcome of the meeting was partly offset by news that Saudi Arabia pulled out of a meeting with non-OPEC oil producing countries scheduled for today.

Following the Thanksgiving Day holiday on Thursday, stocks moved mostly higher over the course of an abbreviated trading session on Friday. With the upward move, the major averages once again reached new record closing highs.

The major averages ended the session at their best levels of the day. The Dow climbed 68.96 points or 0.4 percent to 19,152.14, the Nasdaq rose 18.24 points or 0.3 percent to 5,398.92 and the S&P 500 advanced 8.63 points or 0.4 percent to 2,213.35.

For the week, the major averages showed strong moves to the upside. The S&P 500 jumped by 1.4 percent, while the Dow and the Nasdaq both surged up by 1.5 percent.

The modest strength on Wall Street extended the upward trend seen in reaction to President-elect Donald Trump’s shocking victory earlier this month.

Trading activity on the day was relatively light, however, as many traders remained away from their desks following the holiday. Most markets across the country were scheduled to close earlier than usual, with the stock markets closing at 1 pm ET.

Nonetheless, utilities stocks showed a strong move to the upside on the day, driving the Dow Jones Utilities Average up by 1.5 percent. AES Corp. (AES) and American Water Works (AWK) posted notable gains.

Housing, pharmaceutical, and telecom stocks also saw some strength, while most of the other major sectors showed more modest moves.

Commodity, Currency Markets

Crude oil futures are climbing $0.59 to $46.65 a barrel after plunging $1.90 to $46.06 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,188.30, up $9.90 from the previous session’s close of $1,178.40. On Friday, gold slid $10.90.

On the currency front, the U.S. dollar is trading at 112.70 yen compared to the 113.22 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.0576 compared to Friday’s $1.0589.

Asia

Asian stocks turned in a mixed performance on Monday as sliding oil prices weighed on energy stocks. The U.S. dollar retreated against its major peers, including the Japanese yen, while oil extended Friday’s losses after Saudi Arabia backed out of the non-OPEC meeting slated for Monday.

With OPEC members meeting on Wednesday, it is still possible for the cartel to clinch a final agreement about how to share the burden of supply cuts implied by the preliminary output accord agreed to in September.

China’s Shanghai Composite Index climbed 15.06 points or 0.46 percent to 3,277, an 11-month high, as upbeat industrial profit data for October bolstered optimism that China’s economic growth is bottoming out.

Profits at industrial companies in China rose 9.8 percent in October from a year earlier to 616.1 billion yuan ($89 billion), aided by stronger sales and higher prices, the National Bureau of Statistics said Sunday.

Hong Kong’s Hang Seng Index climbed 107.12 points or 0.47 percent to 22,830.57 after China and Hong Kong securities regulators approved the launch of Shenzhen-Hong Kong Stock Connect.

Japanese shares snapped a seven-session winning streak, with a strengthening yen weighing on markets. The Nikkei 225 Index edged down 24.33 points or 0.13 percent to 18,356.89. The dollar sank nearly 1.6 percent to as low as 111.355 yen after hitting an eight-month high of 113.90 on Friday.

While Kawasaki Heavy Industries, Softbank, Suzuki Motor, Mitsubishi Motors, Kubota, TDK and Shiseido fell 1-3 percent, Sumitomo Mitsui Trust, Nippon Telegraph and Telephone, Mizuho Financial Group, Toshiba and Chubu Electric Power rallied 2-3 percent.

Australian shares ended lower, dragged down by mining and energy stocks. The benchmark S&P/ASX 200 Index dropped 43.40 points or 0.79 percent to 5,464.40 after climbing 2.8 percent last week. The broader All Ordinaries Index slid 37.90 points or 0.68 percent to 5,532.60.

Mining giant BHP Billiton fell 2.6 percent from a 15-month high reached on Friday, and rival Rio Tinto slipped 1.2 percent despite Dalian iron ore futures rising about 2 percent today.

Oil majors Woodside Petroleum, Santos and Oil Search lost 2-3 percent after crude oil prices fell 4 percent on Friday. Financials also fell after last week’s rally, with the big four banks closing down over 1 percent each.

Metcash shares advanced 4.3 percent despite the food and grocery distributor reporting weak half-year results. Beer company Broo jumped 19.4 percent after securing a distribution deal with a large Chinese beer producer.

Europe

The major European markets have moved to the downside on the day. While the German DAX Index has fallen by 0.8 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are down by 0.6 percent and 0.5 percent, respectively.

Swiss bakery business Aryzta fell after its total revenues for the first quarter declined 3.3 percent from last year to 962.3 million euros. Man Group shares tumbled on a brokerage downgrade.

Meanwhile, shares of Aberdeen Asset Management have rallied despite the investment management group posting a year-on-year drop in full-year revenue and profit.

Actelion has climbed after Johnson & Johnson (J&J) confirmed that it has engaged in preliminary discussions with the Swiss biopharmaceutical company regarding a potential transaction.

U.S. Economic Reports

The economic calendar for the week starts of relatively quiet, with major U.S. economic data scheduled to be released today.

Several key reports are due to be released later in the week, however, including the closely watched monthly jobs report on Friday.

Reports on consumer confidence, personal income and spending, pending home sales, and manufacturing activity are also likely to attract attention this week along with the Federal Reserve’s Beige Book.

Stocks In Focus

Edwards Lifesciences (EW) announced an agreement to acquire privately held Valtech Cardio $340 million in cash and stock and the potential for up to $350 million in additional milestone payments over the next 10 years.

A report from the Wall Street Journal said Boeing (BA) is expected to be sanctioned by the World Trade Organization for receiving illegal state subsidies for its newest long-range jetliner.

Merck (MRK) said the FDA has granted priority review status for its cancer drug Keytruda for the treatment of previously treated patients with advanced microsatellite instability-high cancer.

Panera Bread (PNRA) was downgrade to Neutral from Outperform by analysts at Wedbush, while Hasbro was downgraded to Neutral from Overweight from Piper Jaffray.

Meanwhile, Goldman Sachs upgraded its rating on ConocoPhillips to Buy from Neutral and added the oil giant to its “Conviction Buy” list.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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