The futures market is exhibiting a positive bias. There isn't a clear-cut reason why that is, yet a popular explanation is that it reflects tempered concerns about a full-fledged trade war breaking out between the U.S. and China.
Give it a day, though. If the futures are down big tomorrow morning, rest assured the popular explanation will be that it reflects concerns about a full-fledged trade war breaking out between the U.S. and China.
We suppose market participants are attempting to see the sunny side of today's trade headlines, which include reports EU automakers are inclined to support a plan to end EU/U.S. import tariffs and that the U.S. might have a hard time playing tough on tariffs with China, lest it risk hurting the U.S. consumer who has been the beneficiary of lower-priced products manufactured in China.
Currently, the S&P futures are up nine points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 35 points and the Dow Jones Industrial Average futures are up 116 points.
We led with the trade discussion, because the bulk of the gains registered in the futures market were recorded before the news broke that Walt Disney (DIS) has raised its offer to acquire the entertainment assets of 21st Century Fox (FOXA) to $38 per share from $28 per share, with an option for shareholders to take either cash or stock.
That is a retaliatory strike in a potential bidding war with Comcast (CMCSA), which recently offered $35 per share in cash to acquire the same business.
This news should boost related stocks in the media space, as speculation mounts about other takeover targets and higher takeover premiums.
It is also a piece of M&A news that will stoke bullish spirits in the broader market, which has overlooked some disappointing trading action in shares of Oracle (ORCL), FedEx (FDX), and Starbucks (SBUX) following updated earnings results and/or guidance from those widely-held companies.
There is also some disappointing trading action in another widely-held stock. That would be General Electric (GE), which is down 1.5% following the news that it is going to be removed from the Dow Jones Industrial Average where it has held a continuous position since 1907.
This news isn't necessarily a surprise, yet it's a stark reminder of how sharply GE has fallen in terms of both its stock price and operating prowess. Taking its place in the Dow Jones Industrial Average will be Walgreens Boots Alliance (WBA). The switch will take place before the open on Tuesday, June 26.
In other developments, oil prices are up 1.0% to $65.72 on reports Saudi Arabia is finding it difficult to convince other OPEC members to boost production targets significantly at this week's meeting.
A production boost may ultimately be seen, yet reports such as this are fostering a sense that the production boost may not be as significant as feared -- and in that regard the news is seen as price supportive.
There wasn't much reaction to the first quarter current account balance, which widened to $124.1 billion (Briefing.com consensus -$129.2 billion) from an upwardly revised $116.1 billion (from -$128.2 bln) in the fourth quarter.
Something else market participants will be keeping an eye on is the panel discussion in Portugal that will include Fed Chairman Powell, ECB President Draghi, and Bank of Japan Governor Kuroda. That discussion, which will focus on price and wage-setting in advanced economies, is expected to get underway at the bottom of the hour.