Ukraine proposes $100 bln US weapons deal for security guarantees - FT
Investing.com - U.S. stock futures point up, indicating a possible extension to a rebound rally in the opening session of the new trading week. Despite ongoing concerns over the U.S. economy after weak jobs figures last week, strong corporate earnings and bets for a Federal Reserve interest rate cut next month have offered support to equities. U.S. President Donald Trump’s latest tariff threat takes aim at India over its purchases of Russian oil. Meanwhile, Palantir (NASDAQ:PLTR) shares climb in extended hours trading after solid government demand leads the Denver-based data analytics group to raise its annual revenue guidance.
1. Futures point up
U.S. stock futures ticked higher on Tuesday, after equities rallied in the prior session and investors attempted to piece together the trajectory for the American economy as well as corporate earnings.
By 03:37 ET (07:37 GMT), the Dow futures contract had risen by 50 points, or 0.1%, S&P 500 futures had gained 12 points, or 0.2%, and Nasdaq 100 futures had climbed by 63 points, or 0.3%.
The main averages surged on Monday, recovering from a deep sell-off at the end of last week sparked by trade developments and soft U.S. employment numbers from the Bureau of Labor Statistics. President Donald Trump later dismissed the commissioner of the BLS over heavy downward revisions to the totals for June and May, which cast a pall over recent hopes that the U.S. economy was weathering any possible headwinds from the White House’s aggressive tariff agenda.
Still, bets that a cooling jobs picture could persuade the Federal Reserve to cut interest rates as soon as its next meeting in September helped to underpin sentiment, analysts at Vital Knowledge said. The probability of a September reduction now stands at around 90%, versus roughly 63% a week ago, CME’s FedWatch Tool showed.
A relatively solid second-quarter reporting period -- along with sanguine tariff commentary from some company executives -- also bolstered Wall Street.
"[T]he fact we’re coming through a [...] earnings season where management teams didn’t sound dramatically alarmed about economic conditions is giving investors some comfort," the Vital Knowledge analysts said in a note.
2. Trump threatens India with higher tariffs
Trump lodged a fresh tariff threat on Monday, saying he would "substantially" raise levies on Indian goods over the country’s purchases of Russian oil.
The comments came after Trump said he would impose 25% reciprocal tariffs on the South Asian nation, and warned that he could impose tariffs of as high as 100% on the biggest buyers of Russian oil -- China and India. Trump’s attitude toward Moscow has increasingly soured after recent discussions to forge a ceasefire in Ukraine failed.
Trump has also criticized India for its membership in the BRICS group of countries, which he claims have attempted to undermine U.S. interests.
Reuters reported that India plans to keep purchasing Russian oil despite Trump’s threats. New Delhi, meanwhile, has maintained relations with Russia, citing longstanding ties and economic requirements.
With the U.S. tariffs looming, some observers are now predicting that the Reserve Bank of India will slash interest rates on Wednesday. Indian government bonds dipped marginally in early trading on Tuesday.
3. Palantir revenues soar
Shares in Palantir jumped in extended hours trading after the company posted its biggest quarterly revenue total since it went public five years ago, fueled by strong demand from governments and corporations for its artificial intelligence-enhanced services.
The White House’s drive to encourage the widespread adoption of AI -- as well as the Pentagon’s move to buy more software from "non-traditional" providers -- has also powered returns at the data analytics and defense software group.
Second-quarter revenue spiked by 48% from a year ago to around $1 billion, topping Wall Street estimates, with more than 40% of the sales coming from the U.S. government. Palantir, which was co-founded by billionaire Peter Thiel, also exceeded adjusted earnings expectations for the period.
Revenue for the full year is now seen at $4.14 billion to $4.15 billion, an increase from a previous projections of $3.89 billion to $3.90 billion.
Elsewhere on the earnings docket on Tuesday, construction equipment firm and economic bellwether Caterpillar (NYSE:CAT) is due to unveil its latest returns before markets open, as well as pharmaceutical giant Pfizer (NYSE:PFE). After the bell, attention will turn to results from chipmaker Advanced Micro Devices (NASDAQ:AMD).
4. ISM services data ahead
A measure of activity in the U.S. services sector is set to headline the economic calendar, which will be quieter this week after a string of crucial readings in recent days.
The Institute for Supply Management’s non-manufacturing purchasing managers’ index is seen inching up to 51.5 in July from 50.8 in the prior month.
A level above 50 indicates expansion, although the ISM associates a PMI mark above 49 over time with overall economic growth. Services represent a critical portion of the U.S. economy, accounting for more than two-thirds of activity.
Elsewhere, a gauge of U.S. imports and exports in June is also scheduled to be released. Gross domestic product figures last week suggested that imports dropped in the second quarter following a tariff-fueled surge earlier this year.
5. S&P Global China General Services PMI tops estimates
China’s services sector grew more than expected in July, private purchasing managers index data showed on Tuesday, as strong demand helped the sector duck a broader decline in business activity.
The S&P Global China General Services PMI rose to 52.6 in July from 50.6 in the prior month, while also beating expectations for a print of 50.4.
Services were buoyed by robust domestic and foreign demand, S&P Global said in a note. Domestic demand benefited from a slew of consumer-oriented stimulus measures from Beijing, while overseas demand was little impacted by U.S. trade tariffs, given that they apply largely to tangible goods.
The services PMI largely contrasted declines seen in manufacturing PMI data for July, as the latter was walloped by weak demand. China’s services sector has remained a largely bright spot in an otherwise uncertain economic picture, having steadily expanded this year despite a slowdown in manufacturing.
Caixin is no longer sponsors the S&P Global China PMI from July.