Pre Market News: Lower Open Likely For US Markets, Oil Up

Lower open likely for the U.S. markets Tuesday morning as equity gauges were ebbed by weak economic data from China that raised fears of slowing growth and global recession.

At 6:55 a.m. ET, Dow futures were down 37 points and S&P and Nasdaq indices were also down and hinted a lower open.

There was a drastic fall in China’s producer price index. The fall by 0.8 percent in August was the sharpest in three years.

As a result, American chipmakers with a larger China exposure came under pressure in premarket trading. They included Qualcomm, Intel, and Applied Materials.

However, expectation prevails in the Wall Stree that the Federal Reserve will cut interest rates by a quarter percentage point at the September meeting.

The European Central Bank may soon reduce deposit rates the first time since 2016.

Oil price jumps

Oil price jumped for the fifth day in a row and hit the highest level in six weeks on the optimism that OPEC and other crude producing countries will extend production cuts to support prices.

Brent crude futures jumped 0.5 percent at $62.90 a barrel by 0544 GMT. The U.S. West Texas Intermediate (WTI) futures also rose 0.6 percent at $58.17 a barrel.

“It’s a lot of market movement on some pretty strong speculation ... so maybe people are excited that the Saudis are being pretty proactive on this front,” commented Phin Ziebell, senior economist at National Australia Bank, referring to production cuts.

Another catalyst backing oil prices was the Reuters poll data on Monday that said high probability exists that crude stockpiles in the U.S. may have fallen last week marking a fourth consecutive weekly fall.

Analysts polled by Reuters estimated that crude inventories fall could have been average 2.6 million barrels in the week to Sept 6.

Asian markets mixed

Stocks in Asia had a mixed trend on Tuesday, per stock market news. The latest data showed Chinese producer prices fell in August in the worst year-on-year contraction.

The producer price index is a metric of corporate profitability. Chinese stocks slipped with the Shanghai composite tumbling 0.12 percent.

Hong Kong’s Hang Seng index was largely flat.

Japan’s Nikkei 225 gained 0.35 percent while the Topix index added 0.44 percent.

South Korea’s Kospi rose 0.62 percent while Australia’s ASX 200 shed 0.51 percent. Indian markets were closed due to a holiday.

European stocks fell Tuesday morning with investor focus shifting to the meeting of the European Central Bank (ECB) and markets awaited a monetary stimulus package later this week.

In the stock market, the pan-European Stoxx 600 of the markets fell 0.4 percent in mid-morning trade.

Gold prices also eased on Tuesday as risk appetite surged on hopes over a global stimulus and progress in the Sino-U.S. trade talks.

Spot gold fell 0.2 percent to $1,495.00 per ounce as of 0816 GMT.

The U.S. gold futures were down 0.5 percent to $1,503.30 per ounce.

“Globally we are seeing a shift back towards growth assets and that’s coming at the cost of the safe-havens,” said Michael McCarthy, chief strategist at CMC Markets.