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Rising Tensions In Hong Kong May Lead To Pullback On Wall Street

The major U.S. index futures are currently pointing to a lower opening on Friday, with stocks likely to move back to the downside after trending higher in recent sessions.

Rising tensions in Hong Kong may weigh on Wall Street amid concerns widespread protests could impact the ability of the U.S. and China to reach a phase on trade deal.

Traders may also look to take some profits after the upward trend see over the past several sessions lifted the major averages to new record highs.

However, the markets have recently shown a resistance to giving back much ground, with traders seemingly concerned about missing out on further upside.

Overall trading activity is likely to remain subdued, as some traders to the sidelines following the holiday on Thursday.

A lack of major U.S. economic news may also contribute to light trading activity along with the early close for the markets.

Extending the upward trend seen over the past few sessions, stocks moved mostly higher over the course of the trading day on Wednesday. Buying interest was somewhat subdued, but the major averages still managed to reach new record closing highs.

The major averages all closed in positive territory, with the Nasdaq and the S&P 500 just off their highs of the session. The Dow rose 42.32 points or 0.2 percent to 28,164.00, the Nasdaq advanced 57.24 points or 0.7 percent to 8,705.18 and the S&P 500 climbed 13.11 points or 0.4 percent to 3,153.63.

The markets continued to benefit from optimism about a potential U.S.-China trade deal after President Donald Trump said trade talks are "going very well."

"We're in the final throes of a very important deal — I guess you could say, one of the most important deals in trade ever," Trump told reporters at the White House on Tuesday.

The continued strength on Wall Street also came following the release of some upbeat U.S. economic data, including a Commerce Department report showing durable goods orders unexpectedly rebounded in the month of October.

The Commerce Department said durable goods orders climbed by 0.6 percent in October after plunging by a revised 1.4 percent in September.

Economists had expected durable goods orders to decrease by 0.8 percent compared to the 1.2 percent slump that had been reported for the previous month.

Separately, revised data released by the Commerce Department showed the U.S. economy grew by more than initially estimated in the third quarter.

The Commerce Department said real gross domestic product jumped by 2.1 percent in the third quarter compared to the previously estimated 1.9 percent increase. Economists had expected the pace of GDP growth to be unrevised.

The stronger than previous estimated growth reflected upward revisions to private inventory investment, non-residential fixed investment, and consumer spending.

Meanwhile, the National Association of Realtors released a report unexpectedly showing a sharp pullback in U.S. pending home sales in the month of October.

NAR said its pending home sales index plunged by 1.7 percent to 106.7 in October after surging up by 1.4 percent to a revised 108.6 in September.

Economists had expected pending home sales to climb by 0.8 percent compared to the 1.5 percent jump originally reported for the previous month.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

The Commerce Department also released a separate report showing U.S. personal income came in nearly flat in the month of October, although personal spending rose in line with economist estimates.

Late in the trading day, the Federal Reserve released its Beige Book, which said U.S. economic activity expanded modestly from October through mid-November.

The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, noted economic growth continued at a similar pace to the prior reporting period.

Trading activity was relatively light, however, as some traders looked to get a head start on the Thanksgiving Day holiday on Thursday.

Oil service stocks moved sharply higher over the course of the trading session, driving the Philadelphia Oil Service Index up by 2 percent. The strength among oil service stocks came despite a decrease by the price of crude oil.

Significant strength was also visible among tobacco stocks, with the NYSE Arca Tobacco Index climbing by 1.2 percent to its best closing level in over two months.

Natural gas and biotechnology stocks also saw considerable strength on the day, while most of the other major sectors showed more modest moves.

Commodity, Currency Markets

Crude oil futures are slipping $0.16 to $57.95 a barrel after falling $0.30 to $58.11 a barrel on Wednesday. Meanwhile, after sliding $6.60 to $1,460.80 an ounce in the previous session, gold futures are edging down $0.30 to $1,460.50 an ounce.

On the currency front, the U.S. dollar is trading at 109.61 yen compared to the 109.51 yen it fetched on Thursday. Against the euro, the dollar is valued at $1.0987 compared to yesterday's $1.1009.

Asia

Asian stocks moved mostly lower on Friday in the absence of fresh cues from Wall Street and after the release of weak Japanese data.

Caution prevailed amid worries that tensions between the U.S. and China over Hong Kong could delay a potential phase one trade deal.

Chinese shares hit a three-month low as investors fretted about Hong Kong unrest and uncertainty over the prospects for a U.S.-China trade deal. The Shanghai Composite Index slid 17.71 points or 0.6 percent to 2,871.98, while Hong Kong's Hang Seng Index plunged 547.24 points or 2 percent to 26,346.49.

Tokyo shares ended lower amid lingering trade tensions and a lack of overnight cues from Wall Street. The Nikkei 225 Index dropped 115.23 points or 0.5 percent to 23,293.91, while the broader Topix closed 0.5 percent lower at 1,699.36. Exporters ended mixed, with Toyota Motor falling 1.1 percent, while Panasonic rallied 2.3 percent.

Official data showed Japanese industrial production declined more than expected in October, signaling a notable contraction in GDP during the fourth quarter. The unemployment rate remained unchanged as expected in October, a separate report revealed.

According to preliminary data, industrial production plunged 4.2 percent month-on-month in October, in contrast to September's 1.7 percent increase. Economists had forecast a moderate decrease of 2 percent.

On a yearly basis, industrial production decreased by 7.4 percent after rising 1.3 percent a month ago. The unemployment rate held steady at seasonally adjusted 2.4 percent in October, matching economists' expectations.

Australian markets gave up early gains to finish modestly lower in thin trading after five sessions of gains. The benchmark S&P/ASX 200 Index slipped 18.00 points or 0.3 percent to 6,846.00, while the broader All Ordinaries Index fell 17.60 points or 0.3 percent to 6,948.

Banks Commonwealth, NAB and Westpac ended down between 0.7 percent and 1.1 percent amid increased speculation of further rate cuts by the Reserve Bank of Australia next year.

Healthcare stocks rose modestly to extend gains from the previous session. Gold miners Newcrest and Evolution fell around 1 percent as the precious metal remained on track for its worst month in three years.

Select Harvests' shares jumped 6.9 percent after the horticultural firm said its almond harvest for the full year exceeded its own upgraded forecast in August.

Seoul stocks fell sharply amid selling by foreign investors as Hong Kong braced for a fresh round of protests over the weekend. The benchmark Kospi tumbled 30.64 points or 1.5 percent to 2,087.96.

The Bank of Korea retained its benchmark interest rate after lowering it twice this year. The Board said it would maintain its accommodative monetary policy stance and judge whether to adjust the degree of monetary policy accommodation while carefully monitoring developments in the U.S.-China trade negotiations.

Europe

European stocks are turning in a mixed performance on Friday as Hong Kong braces for a fresh round of protests over the weekend.

Meanwhile, the editor of China's state-backed Global Times tabloid said in a tweet that China is considering putting the drafters of the Hong Kong Human Rights and Democracy Act on the no-entry list, barring them from entering the Chinese mainland, Hong Kong and Macao.

While the U.K.'s FTSE 100 Index has slipped by 0.3 percent, the French CAC 40 Index and the German DAX Index are up by 0.2 percent and 0.3 percent, respectively.

Norway's largest bank DNB has slumped after police launched an investigation into the handling of payments from an Icelandic fisheries firm to Namibia.

Swiss specialty chemicals company Clariant has also slipped after announcing it has established a strategic partnership with French cosmetics ingredients maker Plant Advanced Technologies.

Speed-train maker Alstom has also moved to the downside. The company has signed a contract with Italian operator FERROVIENORD for the supply of a first batch of 31 regional trains to Lombardy Region for a total value of 194 million euros.

Meanwhile, Nissan Motor shares have edged higher. At the monthly operating Board meeting, Renault-Nissan-Mitsubishi Alliance decided to appoint a General Secretary to be named in the coming days. The General Secretary will report to the Alliance Operating Board and CEOs.

Electric utility E.ON has also risen after company lifted its full year guidance despite reporting a decrease in nine-month adjusted net income.

In economic news, German retail sales grew at a much slower pace in October, data from Destatis revealed.

Retail sales grew only 0.8 percent annually after expanding 3.4 percent in September. Economists had forecast an annual growth of 3 percent. Nonetheless, this was the fourth consecutive increase in sales.

France's economy expanded as initially estimated in the third quarter, while consumer price inflation accelerated in November, driven by food and services costs, official data showed.

French GDP climbed 0.3 percent sequentially, the same pace of growth as seen in the second quarter. The rate matched the estimate published on October 3.

Consumer price inflation rose to 1 percent in November, as expected, from 0.8 percent in October, provisional estimate from Insee showed.

U.S. Economic Reports

No major U.S. economic is scheduled to be released today following the avalanche of data that was released on Wednesday.

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