The Thursday Market Minute
- Global stocks mixed as the dollar slump resumes, with traders eyeing stimulus talks in Washington and new trade disputes between the U.S. and Europe.
- Deadlocked talks on coronavirus stimulus pressure the dollar, while Treasury yields hold steady in the face of $112 billion in new supply this week.
- USTR leaves tariffs on $7.5 billion in European-made goods in place amid a years-long dispute over state subsidies for planemaker Airbus.
- Weekly jobless claims fall to 963,000, the lowest since the pandemic began and ending 21 weeks of 1 million-plus readings.
- U.S. coronavirus cases rise past 5.2 million, around a quarter of the global total, with fatalities of more than 166,000.
- Oil prices active after OPEC trims its 2020 demand outlook, but gains supported by Energy Department data showing a decrease in U.S. crude stocks.
- U.S. equity futures suggest a modestly weaker open on Wall Street ahead of weekly jobless data at 8:30 am Eastern time and a $28 billion auction of 30-year bonds later in the session.
U.S. equity futures edge lower Thursday, while the dollar faded on foreign exchange markets and Treasury bond yields held steady, as investors looked to weekly jobless data later in the session while growing concerned over the stalemate on conronavirus stimulus in Washington.
Futures pared declines, however, after Commerce Department data showed the number of Americans filing for unemployment benefits fell to 963,000 over the week ending on August 8, the lowest since the pandemic began in mid-March and the first reading in 21 weeks that fell below the 1 million mark. The Street consensus forecast was for a reading of 1.1 million.
President Donald Trump weighed in on a war of words between House Speaker Nancy Pelosi, ranking Senate Democrat Chuck Schumer and Treasury Secretary Steve Mnuchin last night, as each side accused the other of failing to move towards a compromise on coronavirus relief following the expiration of emergency unemployment benefits at the end of last month.
"The bill's not going to happen because they don't even want to talk about it, because we can't give them the kind of ridiculous things that they want that have nothing to do with the China virus," Trump told reporters in Washington, signalling little room for negotiations in the days ahead.
The failure to reach an agreement on support for the 30 million Americans who remain unable to return to work amid the coronavirus pandemic -- which has escalated to 5.2 million cases and 166,000 deaths -- weighed on the U.S. dollar and held back equity futures in overnight trading.
Another trade war salvo also blunted sentiment ahead of today's weekly unemployment figures, which are due at 8:30 am Eastern time, after the U.S. kept tariffs on $7.5 billion worth of European-made goods in place amid an years-long dispute over state subsidies for Boeing's BA planemaking rival Airbus SE.
Futures contracts tied to the Dow Jones Industrial Average, which closed at the highest level since February 21 last night, suggest a 10 point pullback while those linked to the S&P 500, which had its second-highest close on record at 3,380.35 points, is priced for a 2 point dip. Nasdaq futures are indicating a 28 point gain.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.3% lower at 93.145 in overnight dealing, but remains well off the two-year lows it reached last week.
Benchmark 10-year U.S. Treasury bond yields. meanwhile, held at 0.677% following yesterday's record $38 billion auction. Another $28 billion in 30-year paper will be sold by the Treasury later today.
European stocks were on the back foot at the start of trading in London and Frankfurt, with tariffs weighing on sentiment and stronger local currencies -- the euro and the pound -- holding down gains for export-focused companies.
The Stoxx 600 benchmark slipped 0.49% in early trading, while Britain's FTSE 100 was marked 1.22% lower as the pound tested a multi-month high of 1.31 against the beaten-down greenback.
Global oil prices were also active, slipping initially after OPEC released a downgraded forecast for 2020 demand, which is sees falling by 9.1 million barrels per day compared to last year, and then rising as the dollar extended its declines on foreign exchange markets.
WTI contracts for September delivery, the U.S. benchmark, traded 13 cents higher from their Wednesday close in New York and were changing hands at $42.80 per barrel in early European dealing while Brent contracts for October, the new global benchmark, were seen 10 cents higher at $45.53 per barrel.
Overnight in Asia, Japan's Nikkei 225 tested a fresh six month high with a 1.78% gain on the session as semiconductor stocks rallied following yesterday's solid second half outlook from Apple AAPL supplier Foxconn.
The weaker U.S. dollar also lent support to regional stocks, with the MSCI ex-Japan index rising 0.1% into the close of trading, although gains were limited by the third consecutive day of declines in China stocks and a 0.7% pullback for Australia's ASX.