US futures look to extend gains made on Monday

Good morning,

• US futures look to extend gains made on Monday;

• Corporate earnings continue to support gains in stocks;

• Another decline expected from US existing home sales.

US futures are pointing to a moderately higher open on Tuesday, following a positive start to the week that saw the S&P and extend its winning streak to five consecutive days. As it stands, the S&P is expected to open unchanged at 1,871, the Dow 2 points higher at 16,451 and the Nasdaq 5 points higher at 3,564.

Corporate earnings season is helping support stock markets right now despite the problems in the Ukraine failing to go away. Earnings season hasn’t really been that great so far but once again we’re seeing the bar being set very low, making it quite easy for companies to surprise on the upside. The unusually poor weather in the first quarter is behind these low expectations in many cases, which has effectively given companies a free pass on this occasion. The same is unlikely to be offered in a few months time.

With European markets reopening following the long bank holiday weekend, trading volume should improve significantly today. That said, the start of the week is looking a little quiet, with the majority of the data being released over the next few days. Of the data being released today, existing home sales for March will be key, with this being the first batch of housing data that has not been heavily impacted by the weather.

This should therefore provide further insight into what impact rising rates are having on the housing market and therefore what we can expect to see over the course of this year. The number of sales is expected to have slowed again in March, with only 4.55 million homes being sold, marking the third consecutive monthly decline. Anything better here could be viewed as a sign that the weather has been largely responsible for the decline in the first two months of the year. However, I still expect the number of sales to slow this year as rates rise and the economy recovers slower than previously thought.

Earnings will once again be key today, with plenty of companies reporting first quarter earnings before the opening bell and after the close later on. Of the companies reporting before, BNY Mellon and McDonald’s clearly stand out, but I imagine far more attention will be paid to AT&T earnings this evening.