Five things you need to know before the market opens on Tuesday December 27:
1. -- Stock Futures Higher As Markets Cheer China Reopening
U.S. equity futures pushed firmly higher Tuesday, while Treasury bond yields eased modestly, as investors reacted to news of a broader re-opening of the Chinese economy following nearly three years of Covid lockdowns.
Chinas National Health Commission said Monday that foreign visitors will only require a negative Covid test, obtained 48 hours prior to arrival, in order to comply with new travel guidelines. Previous rules required at least eight days in quarantine.
Authorities said China's health priority is now "eabling a stable orderly transition as we adjust our Covid response", with reports suggesting reduced testing and reporting frequencies and notably less-stringent restrictions on domestic travel and businesses.
The changes, added to various forms of easing put in place since a series of civil protests in late November, boosted regional stocks and added to U.S. investor sentiment on Wall Street amid the first day of holiday-thinned trading following the Christmas break.
Benchmark 10-year Treasury note yields, which hit a three-week high of 3.79% prior to the break, eased to 3.777% in overnight trading, although trading volumes were thin owing to closures in Hong Kong and Australia as well as major markets in Europe.
Market volatility gauges were also in decline, with the CBOE's benchmark VIX index falling 1.3% in the overnight session to 21.68 points and within touching distance of the lowest levels in six months.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are indicating a 20 point opening bell gain while those linked to the Dow Jones Industrial Average are priced for a 195 point advance. The tech-focused Nasdaq Composite is looking at a 35 point bump
2. -- Oil Prices Climb on China Demand Bets
Global oil prices jumped to the highest levels in more than three weeks Tuesday as traders extended bets on renewed China demand following a series of moves by Beijing to ease Covid restrictions on business and travel.
Brent crude contracts for February delivery, the global pricing benchmark, were last seen 93 cents higher on the session at $84.85 per barrel while WTI futures for the same month, which are more closely tied to domestic gasoline prices, rose 81 cents to $80.37 per barrel.
The Triple-A motor club said U.S. gas prices nudged modestly higher overnight, to a national average of $3.104 per gallon, but remain firmly south of the $3.286 levels recorded over this time last year.
3. -- Tesla Extends Slumps on Shanghai Production Halt
Tesla (TSLA) shares extended declines in pre-market trading following weekend reports that the carmaker had halted production at its key Shanghai plant amid weakening demand in the world's biggest car market.
Reuters reported the shutdown, first mooted in November, that will halt production over the final week of the year for its Model Y sedan and ultimately reduce output of the sedan by around 30% from November levels.
The move would mark the first time Tesla has voluntarily lowered output levels since the factory was opened in 2018, although Covid restrictions and scheduled maintenance clipped production earlier this year.
Tesla shares were marked 4.33% lower in pre-market trading to indicate an opening bell price of $117.82 each.
4. -- Southwest Shares Slide Amid Storm Flight Chaos
Southwest Airlines (LUV) shares slumped lower in pre-market trading after the carrier warned that it will operate only a third of its typical schedule amid disruptions linked to the brutal winter storm that has paralyzed much of the U.S. midwest.
Southwest Airlines CEO Bob Jordan told the Wall Street Journal late Monday that he expects "another tough day" Tuesday as planes -- and crew -- remain grounded in various cities following the cancellation of around 3,000 flights on Monday - a rate described by the U.S. Department of Transportation as "unacceptable".
Southwest shares were marked 3.55% lower in pre-market trading to indicate an opening bell price of $34.81 each.
5. -- Winter 'Bomb Cyclone' Storm Kills 56, Paralyzes U.S. Midwest
President Joe Biden approved Federal emergency relief for the state of New York late Monday as the death toll from days of brutal winter storms continued to climb.
As many as 27 people are reported to have died in Erie County, the region that surrounds the city of Buffalo, one of the country's worst-hit metropolitan areas, with forecasters calling for another ten inches of snow in upper parts of the state on Tuesday. In total, officials estimate that as many as 56 people may have died as a result of the 'bomb cyclone' storm, with has stretched from Northern Canada all the way to the U.S.-Mexico border.
Governor Kathy Hochul called it "the blizzard of the century" and warned of further disruptions to power, travel and first responders amid the subzero temperatures and punishing winds.
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