Market Analysis

Beyond the Numbers

Uncertainty May Lead To Choppy Trading On Wall Street
2/22/2018 8:49 AM

The major U.S. index futures are pointing to a roughly flat opening on Thursday following the afternoon weakness seen in the previous session.

Uncertainty about the near-term outlook for the markets may lead to choppy trading on Wall Street after the volatility seen in recent weeks.

Lingering concerns about future interest rates hikes by the Federal Reserve may also keep some traders on the sidelines on the day.

Stocks came under pressure in afternoon trading on Wednesday following the release of the minutes of the latest Federal Reserve meeting.

The major averages ended the day firmly in negative territory, just off their lows of the session. The Dow slid 166.97 points or 0.7 percent to 24,797.78, the Nasdaq dipped 16.08 points or 0.2 percent to 7,218.23 and the S&P 500 fell 14.93 points or 0.6 percent to 2,701.33.

The lower close on Wall Street came after the minutes of the Fed's January meeting indicated the central bank still plans to raise interest rates three times in 2018.

The Fed raised its projection for inflation from anemic levels, saying that core personal consumption expenditure index "would rise notably faster this year" from its 1.5% rate in December.

Natural gas stocks showed a significant move to the downside on the day, dragging the NYSE Arca Natural Gas Index down by 2.9 percent.

Real estate, utilities, and semiconductor stocks also saw considerable weakness, moving lower along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are falling $0.17 to $61.51 a barrel after slipping $0.11 to $61.68 a barrel on Wednesday. An ounce of gold is trading at $1,325.50, down $6.60 compared to the previous session’s close of $1,332.10. On Wednesday, gold inched up $0.90.

On the currency front, the U.S. dollar is trading at 107.03 yen compared to the 107.78 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2288 compared to yesterday’s $1.2284.


Asian stocks turned in a mixed performance on Thursday, as bond yields rose and the dollar stood near a one-week high against a basket of major currencies after the minutes from the Federal Reserve's January meeting showed the central bank plans to raise interest rates three times in 2018.

According to the Fed minutes, policymakers expressed rising confidence on inflation while agreeing that the strengthening in the near-term economic outlook increased the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate.

Japanese shares fell sharply to close near a one-week low as U.S. rate hike bets boosted demand for the yen and office equipment maker Ricoh said it is conducting impairment tests.

The Nikkei 225 Index shed 234.37 points or 1.1 percent to 21,736.44, and the broader Topix index closed 0.9 percent lower at 1,746.17.

Exporters Canon and Panasonic fell around 1.5 percent each, while automaker Honda Motor declined 1 percent and Toyota Motor shed 0.9 percent. Ricoh tumbled 3.9 percent on reports that it was considering taking a charge of up to 100 billion yen ($930 million) this fiscal year.

Meanwhile, Australian shares ended a choppy session marginally higher as investors digested a barrage of earnings reports. The benchmark S&P/ASX 200 Index inched up 7.20 points or 0.1 percent to 5,950.90, while the broader All Ordinaries index edged up 10.40 points or 0.2 percent to 6,057.70.

Mining heavyweight BHP Billiton rose 1.3 percent to rebound from recent losses, but rivals Rio Tinto and Fortescue Metals Group closed modestly lower.

National flag carrier Qantas soared 5.9 percent after it posted record profits for the six months to December. In the energy sector, Woodside Petroleum shares lost 3.3 percent on turning ex-dividend, while rival Santos climbed 2.2 percent.

Nine Entertainment jumped 16.2 percent after the television broadcaster reported a turnaround to a net profit in the first half of the year on higher revenues. Shares of Crown Resorts advanced 4.4 percent as the casino operator reported a slight increase in first-half underlying profit.

On the other hand, Blackmores slumped 14.7 percent after the vitamin maker warned of a soft second half due to "supply issues" and a soft Australian retail market.

China's Shanghai Composite Index rallied 69.57 points or 2.2 percent to end at 3,268.56 as traders returned to their desks following the Lunar New Year holidays. Hong Kong's Hang Seng Index slumped 466.21 points or 1.5 percent to 30,965.68.


European stocks have come under selling pressure on Thursday as the latest Federal Reserve meeting minutes rekindled fears of inflation and higher interest rates and the day's economic releases disappointed investors.

While the French CAC 40 Index is down by 0.5 percent, the German DAX Index is down by 0.8 percent and the U.K.’s FTSE 100 Index is down by 1 percent.

Survey data from Ifo institute showed that the German business sentiment index fell more than expected to 115.4 in February from 117.6 in January.

Separately, a government report showed the U.K. economy expanded by 0.4 percent in the fourth quarter, down from the 0.5 percent preliminary estimate released last month. Economists had expected no change in the estimate.

British recruitment firm Hays has tumbled despite reporting a 16 percent increase in its first-half profits.

British American Tobacco shares have also moved to the downside. The company posted higher full year sales and profits, although the volume of cigarettes and tobacco heating products fell by 2.6 percent on an organic basis.

Mining heavyweight Anglo American has declined despite the company announcing its biggest dividend in a decade.

Meanwhile, Telefonica shares have advanced. The Spanish telecom company posted a 23 percent rise in fourth quarter core profits despite adverse exchange rate movements.

Henkel has also risen after the German chemical and consumer goods company confirmed its 2020 outlook after posting 9.1 percent growth in adjusted net profit for fiscal year 2017.

Barclays has jumped after the British lender reported a 10 percent rise in pretax profit for 2017 but announced a full-year net loss of 1.9 billion pounds due to one-off and goodwill charges.

U.S. Economic Reports

A report released by the Labor Department unexpectedly showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended February 17th.

The report said initial jobless claims dipped to 222,000, a decrease of 7,000 from the previous week's revised level of 229,000.

The drop surprised economists, who had expected jobless claims to come in unchanged compared to the 230,000 originally reported for the previous month.

At 10 am ET, the Conference Board is scheduled to release its report on leading economic indicators in the month of January. The leading economic index is expected to climb by 0.6 percent.

New York Federal Reserve President William Dudley is also due to speak at the New York Fed’s Economic Press Briefing on Puerto Rico and the U.S. Virgin Islands in New York at 10 am ET.

At 11 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended February 16th. Crude oil inventories are expected to increase by 1.8 million barrels.

Atlanta Fed President Raphael Bostic is due to speak at the 2018 Banking Outlook Conference in Atlanta, Georgia, at 12:10 pm ET.

At 1 pm ET, the Treasury Department is scheduled to release the results of its auction of $29 billion worth of seven-year notes.

Dallas Fed President Robert Kaplan is due to participate in a moderated Q&A at the Greater Vancouver Board of Trade: Beyond NAFTA? Safeguarding our Trading Relationship in Vancouver at 3:30 pm ET.
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