Markets Upbeat On Economy's Resilience

(RTTNews) - The major U.S. index futures are pointing to a higher opening on Monday, with sentiment suggesting that traders are upbeat about the economy's resilience. Hopes concerning the preservation of economic momentum firmed up in the wake of recent strong data points. Meanwhile, across the Atlantic, the markets are advancing strongly despite the release of some weak economic data. The strength apparently stems from stimulus expectations. Domestically, earnings season gets underway, with aluminum maker Alcoa (AA) kick starting the proceedings with its quarterly earnings report after the close of the markets.

U.S. stocks extended their gains in the week ended July 5th, as positive economic data continued to lend support to the markets.

Last Monday, the major averages advanced notably, capitalizing on positive manufacturing and construction spending data. The overbought levels introduced caution on Tuesday, as the major averages retreated modestly despite the release of positive monthly auto sales and better than expected factory orders data.

After languishing below the unchanged line for the bulk of the truncated session on Wednesday, the major averages recovered in late trading, as traders digested another batch of mostly positive economic data. Following the release of a report showing bigger than expected job gains, the averages held mostly above the unchanged line on Friday and closed notably higher.

For the week ended July 5th, the Dow Industrials added 1.52 percent and the S&P 500 Index advanced 1.59 percent, while the Nasdaq Composite outperformed with a 2.2 percent rally.

Among the sector indexes, the NYSE Arca Biotechnology Index, the NYSE Arca Securities Broker/Dealer Index and the KBW Bank Index all gained over 4 percent. Additionally, the Philadelphia Semiconductor Index and the Dow Jones Transportation Average added over 1 percent each.

On the other hand, the NYSE Arca Gold Bugs Index slid 5.35 percent and the Philadelphia Housing Sector Index receded 3.06 percent. The Dow Jones Utility average ended down 1.84 percent.

Currency, Commodity Markets

Crude oil futures are receding $0.94 to $102.28 a barrel after surging up $6.81 or 7.05 percent to $103.22 a barrel in the week ended July 5th.

Last Monday, oil rose close to $1.50-a-barrel in reaction to the positive economic data. The commodity advanced yet again on Tuesday, rising by $1.61-a-barrel, as data continued to suggest a firming recovery trend. After rising moderately on Thursday, oil climbed by close to $2-a-barrel on Friday after the non-farm payrolls report surprised to the upside.

Gold futures, which fell $11 or 0.90 percent to $1,212.70 an ounce in the previous week, are currently rising $20 to $1,232.70 an ounce.

Among currencies, the dollar rose across the board in the week ended July 5th, with the greenback getting ample support from positive U.S. data. The better than expected data has re-ignited worries that the Fed may prematurely wind up its quantitative easing program.

The dollar added 1.39 percent against the euro before ending the week at $1.2829. Additionally, the buck ended the week 2.08 percent higher against the yen at 101.20 yen.

The U.S. dollar is currently trading at 101.10 yen and is valued at $1.2847 versus the euro.

Asia

The major Asian markets fell across the board amid fears that the recent string of strong data from the U.S. will prompt the nation's central bank to withdraw stimulus earlier than anticipated. Meanwhile, the New Zealand market bucked the downtrend with a modest gain.

Japan's Nikkei 225 average opened higher and moved sideways in the morning before declining in late morning trading. After dropping slightly below the unchanged line in early afternoon trading, the index moved sideways till late afternoon trading. Subsequently, the index declined sharply, ending the session down 200.63 points or 1.40 percent at 14,109.

A majority of stocks declined in the session, with real estate and construction stocks leading the slide. Financial and export stocks also came under selling pressure. On the other hand, heavy machinery makers and paper stocks gained some ground.

Australia's All Ordinaries, which moved about nervously close to the unchanged line in early trading, fell thereafter and was confined below the unchanged line for the rest of the session. The index closed 28.80 points or 0.60 percent lower at 4,798. Most sectors declined, with the exception of consumer discretionary, energy and telecom stocks. Material stocks were the worst hit.

Hong Kong's Hang Seng Index closed at 20,632, down 222.79 points or 1.07 percent.

On the economic front, the Bank of Japan reported that lending by Japanese banks rose 2.2 percent year-over-year in June following a 2.1 percent increase in May. A report released by the Ministry of Finance showed that Japan's current account surplus fell by more than expected in May. The current account surplus fell to 540.7 billion yen in May from a surplus of 750 billion yen for April. Economists had expected a more modest drop to 600 billion yen. The trade deficit came in roughly in line with estimates at 906.7 billion yen.

Europe

European stocks opened higher and have legged up further after they declined last Friday, weighed down by weak Germany factory orders data.

In corporate news, U.K. homebuilder Bovis Homes said in its trading update for the six-month period that it has performed well in the first half of 2013. The company said private reservations improved 40 percent year-over-year.

Swiss Re said it expects claims burden of $300 million from the recent flooding in central and Eastern Europe, net of retrocession and before tax.

On the economic front, German exports fell 2.4 percent month-over-month in May, according to a report released by the German Federal Statistical Office. Economists expected a 0.1 percent increase in exports. Imports rose a better than expected 1.7 percent. Consequently, the trade surplus fell to 13.1 billion euros in May from 18 billion euros in April.

German industrial production declined more than expected in May due to notable decline in construction and energy output, according to a report released by the Federal Ministry of Economics and Technology. Industrial output fell 1 percent in May from the previous month, the steepest since October 2012. Economists expected the production to fall 0.5 percent after rising 2 percent in April.

U.S. Economic Reports

The unfolding week's economic calendar is fairly light both in terms of the quantity and the importance of the economic data. Preliminary results of a consumer sentiment survey by Reuters and the University of Michigan, the jobless claims report, the minutes of the June 18-19th monetary policy meeting and a few Fed speeches, including one from Chairman Ben Bernanke, are among the closely watched events of the week.

The Federal Reserve's consumer credit report for May, the Commerce Department's wholesale inventories report for May, the Labor Department reports on producer prices and export and import prices for June, the Treasury budget for June and the results of Treasury auctions of 3-year and 10-year notes and 30-year bonds round up the economic events of the week.

The Federal Reserve is scheduled to release its report on consumer credit at 3 pm ET. Economists expect outstanding consumer credit to have increased by $13 billion in May following a $11.1 billion increase in April.

The $11.1 billion increase in consumer credit in April reflected a $10.3 billion increase in non-revolving credit and a more modest $0.8 billion increase in revolving credit. Revolving credit is usually tied to credit card loans, while non-revolving credit is associated with auto loans.

Stocks in Focus

Dell (DELL) may see some upside after the ISS proxy voting and corporate governance advisory firm recommended shareholders to vote for the proposed cash sale transaction at $13.65 per share.

Alcoa and WD-40 (WDFC) are among the companies due to release their quarterly results after the close of trading.