US MARKET

The major U.S. index futures are pointing to a sharply lower opening on Tuesday, with sentiment likely to be impacted by insipid earnings and lackluster economic data. A report released by the Commerce Department showed that housing starts declined to an 8-month low in June. However, building permits, an indicator of future housing activity, increased. Anxiety over earnings is likely to keep sentiment subdued, with more uncertainty looming ahead in the form of stress test results of the European banking institutions.

U.S. stocks opened Monday’s session higher, but they moved back to the downside in early trading following the release of a weak housing market reading. After dipping into negative territory in mid-morning trading, the major averages rose steadily, although amid caution, to end moderately higher.

The Dow Industrials ended the session up 56.53 points or 0.56% at 10,154 and the Nasdaq Composite added 19.18 points or 0.88% to close at 2,198, while the S&P 500 Index closed up 6.37 points or 0.59% at 1,071.

CANADIAN, COMMODITIES MARKET

Toronto stocks may open lower Tuesday amid falling commodities prices and mixed cues from the global equity markets. Traders were also digesting mixed earnings reports from south of the border.

Meanwhile, the Bank of Canada raised the target rate for overnight loans between commercial banks a quarter point to 0.75%. The Bank rate is correspondingly 1% and the deposit rate is 0.50%.

ASIA MARKETS

Most Asian markets advanced on Tuesday, with the exception of the Japanese market, which opened after yesterday's public holiday and was reacting to yesterday's sell-off in Asia. The rebound in the region followed Wall Street's resilience overnight even in the wake of the disappointing housing report and mixed earnings reports. The Chinese Shanghai Composite Index led the gains with a 2.15% advance.

Australia's All Ordinaries opened modestly higher and moved sideways in the morning before taking off strongly in early afternoon trading. Thereafter, the index moved steadily higher till late afternoon before consolidating for the rest of the session. The index ended up 46 points or 1.05% at 4,419. The market witnessed broad based buying interest, with material stocks leading the way.

The minutes of the Reserve Bank of Australia's July monetary policy meeting showed that the bank is of the view that a wait-and-watch stance is warranted and that the release of the June quarter inflation data, which is due later this month, would direct their next policy move. The members also felt that holding interest rates steady was justifiable given that rates had already returned to "average" levels.

The monetary policy board saw the decision to hold the cash rate at 4.50% to be appropriate given "increased international uncertainty." The members noted that the coming month would see important announcements, such as the results of the European banking stress tests, which have the potential to have a significant impact on financial markets and global confidence.

Hong Kong's Hang Seng Index opened almost unchanged but rose in early trading. After rising till early afternoon trading, the index moved sideways to close up 173.64 points or 0.86% at 20,265. Thirty-seven of the forty-three index components closed the session higher.

EUROPEAN MARKETS

Amid reports that German lender Hypo Real Estate has failed the stress tests conducted on European financial institutions, the results of which are officially due on Friday, the European markets are trading little changed on Tuesday. The major averages opened sharply higher following losses in the previous four sessions, but they have surrendered their gains since then and are currently-trading notably lower.

The French CAC 40 Index and the German DAX Index are moving down 1.29% and 1.61%, respectively, while the U.K.’s FTSE 100 Index is declining 0.73%.