Stocks May Open Higher On Strength In Chinese Markets - U.S. Commentary

(RTTNews) - Following the long holiday weekend, stocks are likely to show a strong move to the upside in early trading on Tuesday. The major index futures are currently pointing to a sharply higher open for the markets, with the Dow futures up by 266 points.

Early buying interest may be generated by reaction to strength among Chinese stocks, which surged higher in the latter part of the trading day.

China's Shanghai Composite Index jumped by 2.9 percent on the day, contributing to a rally in other overseas markets.

The late-day strength in the Chinese market suggests state intervention despite recent reports indicating the government abandoned attempts to boost the stock market through large-scale share purchases.

Nonetheless, traders may be reluctant to make any significant moves amid a lack of major U.S. economic data on the day.

The economic calendar remains relatively light throughout the holiday-shortened week, although traders are likely to keep a close eye on reports on weekly jobless claims, producer prices, and consumer sentiment.

Last week's mixed jobs data is likely to increase the focus on the other economic reports due to be released in the days leading up to the Federal Reserve's monetary policy announcement next week.

Stocks moved mostly lower during trading last Friday following the release of the closely watched monthly employment report. The losses on the day came after the major averages ended Thursday's trading on opposite sides of the unchanged line.

The major averages climbed off their worst levels late in the session but still closed firmly in the red. The Dow dropped 272.38 points or 1.7 percent to 16,102.38, the Nasdaq slid 49.58 points or 1.1 percent to 4,683.92 and the S&P 500 fell 29.91 points or 1.5 percent to 1,921.22.

For the week, the major averages all posted substantial losses. The Nasdaq tumbled by 3 percent, while the Dow and the S&P 500 plummeted by 3.2 percent and 3.4 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index plunged by 2.4 percent, while Hong Kong's Hang Seng Index surged up by 3.3 percent.

Meanwhile, the major European markets have all moved sharply higher on the day. While the German DAX Index has jumped by 2.3 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are up by 1.9 percent and 1.6 percent, respectively.

In commodities trading, crude oil futures are sliding $0.38 to $45.67 a barrel after climbing $0.83 or 1.8 percent to $46.05 a barrel in the week ended September 4th. Gold futures, which fell $12.60 or 1.1 percent to $1,121.40 an ounce last week, are inching up $1.10 to $1,122.50 an ounce.

Among currencies, the U.S. dollar turned in a mixed performance last week. The greenback dropped about 2 percent against the yen to 119.28 yen but edged up 0.1 percent against the euro to $1.1170. The dollar is currently trading at 120.03 yen and is valued at $1.1163 versus the euro.