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Futures Pointing To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to move to the upside after showing a lack of direction for two straight sessions.

Optimism about a quick economic recovery following the coronavirus pandemic may contribute to initial strength on Wall Street.

A lack of major U.S. economic data may keep some traders on the sidelines, although investors are likely to keep an eye on comments from several Federal Reserve officials.

Following the lackluster performance seen in the previous session, stocks continued to experience choppy trading on Thursday. The major averages bounced back and forth across the unchanged line before closing mixed for the second straight day.

The tech-heavy Nasdaq closed higher for the fifth straight session, rising 32.52 points or 0.3 percent to 9,943.05. The S&P 500 also inched up 1.85 points or 0.1 percent to 3,115.34, while the Dow dipped 39.51 points or 0.2 percent to 26,080.10.

The perpetuation of the choppy trading on Wall Street came as traders digest a mixed batch of U.S. economic data.

Before the start of trading, the Labor Department released a report showing first-time claims for unemployment benefits fell by much less than expected in the week ended June 13th.

The Labor Department said initial jobless claims dropped to 1.508 million, a decrease of 58,000 from the previous week's upwardly revised level of 1.566 million.

Economists had expected jobless claims to tumble to 1.300 million from the 1.542 million originally reported for the previous week.

Noting the latest weekly decrease reflects the smallest decline since claims began retreating from their late March peak, economists at Oxford Economics said, "The latest jobless claims data reminds us that significant stress remains in the labor market."

Meanwhile, the Philadelphia Federal Reserve released a separate report showing an unexpected expansion in regional manufacturing activity in the month of June.

The Philly Fed said its diffusion index for current general activity soared to a positive 27.5 in June from a negative 43.1 in May, with a positive reading indicating an expansion in regional manufacturing activity.

Economists had expected the index to show a much more modest increase to a negative 23.0, which would have still indicated a contraction.

The Conference Board also released a report showing its reading on leading economic indicators rebounded by more than expected in the month of May.

The Conference Board said its leading economic index jumped by 2.8 percent in May after plunging by 6.1 percent in April and 7.5 percent in March. Economists had expected the index to climb by 1.7 percent.

Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, noted the rebound by the leading index was primarily due to initial jobless claims pulling back well off the record high set in late March.

"The improvements in labor markets, housing permits, and stock prices also buoyed the LEI, but new orders in manufacturing, consumers' outlook on the economy, and the Leading Credit Index still point to weak economic conditions," Ozyildirim said.

He added, "The breadth and depth of the decline in the LEI between February and April suggest the economy at large will remain in recession territory in the near term."

Lingering concerns about a second wave of coronavirus infections also kept traders on the sidelines amid a rising number of cases in Beijing as well as several U.S. states.

Beijing has reportedly closed schools and canceled flights to contain the latest coronavirus outbreak, which has purportedly led to more than 100 new confirmed cases.

Meanwhile, CNN analysis of data from Johns Hopkins University found ten U.S. states are seeing their highest seven-day average of new coronavirus cases per day since the pandemic started.

CNN said the states seeing record-high averages are Alabama, Arizona, California, Florida, Nevada, North Carolina, Oklahoma, Oregon, South Carolina and Texas.

The rising number of new cases in Oklahoma has not dissuaded President Donald Trump from plans to hold a massive indoor rally in Tulsa on Saturday.

Most of the major sectors showed only modest moves on the day, contributing to another lackluster performance on Wall Street.

Oil stocks showed a strong move to the upside, however, with the NYSE Arca Oil Index climbing by 1.4 percent. The strength in the sector came as the price of crude oil for July delivery jumped $0.88 to $38.84 a barrel.

Significant strength was also visible among natural gas stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca Natural Gas Index.

Software stocks also turned in a strong performance, resulting in a 1.4 percent advance by the Dow Jones U.S. Software Index.

On the other hand, gold stocks saw considerable weakness on the day, dragging the NYSE Arca Gold Bugs Index down by 1.7 percent. The weakness in the sector came as the price of gold for August delivery fell $4.50 to $1,731.10 an ounce.

Housing and commercial real estate stocks also showed notable moves to the downside, with the Philadelphia Housing Sector Index and the Dow Jones U.S. Real Estate Index both falling by 1.2 percent.

Commodity, Currency Markets

Crude oil futures are jumping $1.39 to $40.23 a barrel after climbing $0.88 to $38.84 a barrel on Thursday. Meanwhile, after sliding $4.50 to $1,731.10 an ounce in the previous session, gold futures are rising $14.80 to $1,745.90 an ounce.

On the currency front, the U.S. dollar is trading at 106.88 yen versus the 106.97 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1244 compared to yesterday's $1.1205.

Asia

Asian stocks rose on Friday as optimism about a possible global economic recovery helped investors shrug off a second wave of coronavirus infections.

Chinese shares rose, a day after policymakers pledged to maintain ample financial system liquidity in the second half of the year. Sentiment was also bolstered after a Chinese health expert said the virus outbreak in Beijing had been brought under control.

The benchmark Shanghai Composite index climbed 28.32 points, or 0.96 percent, to 2,967.63, while Hong Kong's Hang Seng index ended up 0.73 percent at 24,643.89.

Japanese shares advanced on hopes of an economic recovery after the government lifted all coronavirus-related curbs on domestic travel to help the economy bounce back from a pandemic recession.

The Nikkei average rose by 123.33 points, or 0.55 percent, to 22,478.79 while the broader Topix index closed marginally lower at 1,582.80.

Airline and other transportation sectors led gains, with Japan Airlines climbing 2.1 percent and ANA Holdings rising 1.4 percent.

Semi-conductor stocks also gained ground after factory activity in the U.S. mid-Atlantic region rebounded sharply in June. Advantest rallied 2.5 percent and Screen Holdings added 1.2 percent.

Tokyo Electron soared 7.1 percent after it forecast an 11 percent rise in net profit for the current business year through March 2021.

Overall consumer prices in Japan were up 0.1 percent year-on-year in May, the Ministry of Internal Affairs and Communications said - matching estimates and unchanged from the April reading.

Core consumer prices, which exclude volatile food prices, sank an annual 0.2 percent - missing expectations for a fall of 0.1 percent and unchanged from the previous month's reading.

According to minutes of the bank's April meeting released today, BoJ board members had warned that stronger monetary support and closer policy coordination with the government were needed to prevent Japan from returning to deflation.

Australian markets hit a more than one-week high before giving up all gains to end the session on a flat note amid renewed concerns about a second wave of Covid-19 infections around the world.

The benchmark S&P/ASX 200 index edged up by 6.10 points to 5,942.60, while the broader All Ordinaries index ended up by 9.70 points at 6,061.60.

Energy stocks such as Origin Energy, Santos and Woodside Petroleum rose between 0.2 percent and 0.6 percent. Cardinal Resources jumped as much as 28 percent after its board recommended an all-cash takeover offer for the company from Shandong Gold Mining Co.

Miners BHP, Fortescue Metals Group and Rio Tinto fell between 1.4 percent and 1.9 percent. Banks ended on a mixed note. ANZ fell 1.7 percent, Commonwealth Bank shed half a percent and NAB gave up 0.6 percent while Westpac rose 0.4 percent.

AMP gained 0.6 percent. The financial services group said it has appointed Boe Pahari, its global head of infrastructure equity, as its chief executive from July 1, succeeding Adam Tindall.

Australian retail sales grew by 16.3 percent on a monthly basis in May, the biggest on record, following a record decline of 17.7 percent in April, a government report showed today.

Seoul stocks fluctuated before closing a tad higher despite reports suggesting that North Korea redeployed troops to border guard posts and the Kaesong Industrial Complex, tearing up a 2018 military de-escalation pact between the two Koreas. The benchmark Kospi gained 0.37 percent to end at 2,141.32.

South Korea added 49 new coronavirus cases today, raising the total caseload to 12,306, according to the Korea Centers for Disease Control and Prevention (KCDC).'

Europe

European stocks rebounded on Friday as Japan lifted the last remaining travel restrictions and a Chinese health expert said that a recent virus outbreak in Beijing is under control.

Meanwhile, investors await a key European Union meeting, where leaders will meet via teleconferencing to discuss proposals for a 750 billion-euro EU-wide coronavirus recovery fund.

In economic releases, the euro area current account surplus fell to EUR 14.4 billion in April from EUR 27.4 billion in March, data from the European Central bank showed. This was the lowest since April 2017, when the surplus was EUR 11.7 billion.

The surplus on trade in goods narrowed to EUR 13 billion from EUR 32 billion a month ago, while the surplus on services doubled to EUR 4 billion from EUR 2 billion.

U.K. retail sales recovered at a faster than expected pace in May driven by non-food store sales and the budget deficit reached a record high amid high expenditure, official data showed.

Retail sales volume increased at a pace of 12 percent on month, in contrast to an 18 percent decrease in April, the Office for National Statistics reported. Sales were forecast to climb 5.7 percent.

The pan European Stoxx 600 climbed 0.8 percent to 366.43 after declining 0.7 percent in the previous session.

The German DAX gained 0.9 percent, France's CAC 40 index rallied 1.1 percent and the U.K.'s FTSE 100 was up 1.2 percent.

Reinsurer Swiss Re rose half a percent as it announced the appointment of Thierry Léger as the Group Chief Underwriting Officer, effective September 1.

German airline Lufthansa advanced 0.7 percent amid signs of movement in its stalled government bailout.

Telecommunications company Deutsche Telekom gained 1 percent after confirming its growth targets.

Wirecard AG shares slumped 46 percent to extend losses from the previous session. The payments processor said it has suspended the member of the Management Board Jan Marsalek on a revocable basis, after revealing that auditors couldn't find about 1.9 billion euros in cash.

Ferrexpo shares tumbled 3 percent. The commodity trading and mining company said that a district court in Kyiv has prohibited the transfer of the company's 50 percent stake in Ferrexpo Poltava Mining.

U.S. Economic Reports

Boston Federal Reserve President Eric Rosengren is scheduled to speak at the Greater Providence Chamber of Commerce on the U.S. economy and current financial conditions at 10:15 am ET.

At 12 pm ET, Federal Reserve Vice Chair for Supervision Randal Quarles is due to speak at the Women in Housing and Finance Foundation Zoom-streamed event on stress testing.

Fed Chair Jerome Powell and Cleveland Fed President Loretta Mester are scheduled to speak with Youngstown, Ohio-area community leaders, business owners, and others in a "Building a Resilient Workforce" live-streamed Cleveland Fed video-conference event at 1 pm ET.

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