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Futures Pointing To Sharply Lower Open On Wall Street - U.S. Commentary

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With traders returning to their desks following the national day of mourning on Wednesday, stocks are likely to extend the sell-off seen on Tuesday in early trading on Thursday. The major index futures are currently pointing to a sharply lower open for the markets, with the Dow futures down by 396 points.

Continue skepticism about the potential for a long-term trade agreement between the U.S. and China is likely to weigh on the markets after the arrest of a top executive at Chinese tech giant Huawei.

Huawei CFO Meng Wanzhou was arrested in Canada on suspicion of violating U.S. trade sanctions against Iran and faces possible extradition to the U.S.

The development has added to uncertainty about whether the 90-day trade truce negotiated by President Donald Trump and Chinese President Xi Jinping will give the two sides enough time to reach a long-term deal.

Traders will also be reacting to a slew of U.S. economic data, as several reports originally due to be released on Wednesday were postponed for former President George H.W. Bush's funeral.

Payroll processor ADP released a report showing private sector employment increased by less than expected in the month of November.

ADP said private sector employment climbed by 179,000 jobs in November after jumping by a downwardly revised 225,000 jobs in October.

Economists had expected an increase of about 195,000 jobs compared to the addition of 227,000 jobs originally reported for the previous month.

"Job growth is strong, but has likely peaked," said Mark Zandi, chief economist of Moody's Analytics. "This month's report is free of significant weather effects and suggests slowing underlying job creation."

He added, "With very tight labor markets, and record unfilled positions, businesses will have an increasingly tough time adding to payrolls."

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits edged down by less than expected in the week ended December 1st.

The report said initial jobless claims slipped to 231,000, a decrease of 4,000 from the previous week's revised level of 235,000. Economists had expected jobless claims to dip to 225,000.

The Commerce Department also released a report showing the U.S. trade deficit widened by more than anticipated in the month of October.

The report said the trade deficit widened to $55.5 billion in October from a revised $54.6 billion in September.

Economists had expected the trade deficit to widen to $55.0 billion from the $54.0 billion originally reported for the previous month.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on activity in the service sector in the month of November.

The ISM's non-manufacturing index is expected to dip to 59.2 in November after pulling back to 60.3 in October, although a reading above 50 would still indicate service sector growth.

The Commerce Department is also due to release its report on new orders for manufactured goods in the month of October. Factory orders are expected to slump by 2.0 percent.

Following the rally seen on Monday, stocks showed a substantial move back to the downside during trading on Tuesday. The major averages moved sharply lower over the course of the session, more than offsetting Monday's strong gains.

The major averages ended the session just off their worst levels of the day. The Dow plunged 799.36 points or 3.1 percent to 25,027.07, the Nasdaq tumbled 283.09 points or 3.8 percent to 7,158.43 and the S&P 500 slumped 90.31 points or 3.2 percent to 2,700.06.

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Thursday. Japan's Nikkei 225 Index plummeted by 1.9 percent, while Hong Kong's Hang Seng Index nosedived by 2.5 percent.

The major European markets have also shown significant moves to the downside on the day. While the German DAX Index has plunged by 2.5 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are down by 2.4 percent and 2.3 percent, respectively.

In commodities trading, crude oil futures are tumbling $1.58 to $51.31 a barrel after falling $0.36 to $52.89 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,243.40, up $0.80 compared to the previous session's close of $1,242.60. On Wednesday, gold slid $4.20.

On the currency front, the U.S. dollar is trading at 112.70 yen compared to the 113.19 yen it fetched on Wednesday. Against the euro, the dollar is valued at $1.1360 compared to yesterday's $1.1344.

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