Dow Futures Edge Higher Amid Global Coronavirus Infection Spike; EU Leaders' Summit In Focus

U.S. coronavirus infections hit a global record 77,300 yesterday, according to Johns Hopkins data, sapping risk appetite in markets around the world and setting up a weaker open on Wall Street.

The Friday Market Minute

  • Global stocks mixed as risk appetite fades amid rising coronavirus infection rates, with record new cases recorded in the U.S. and Tokyo.
  • Around 250,000 new cases were reported yesterday, taking the worldwide total to 13.8 million: global deaths near 600,000.
  • U.S.-China tensions remain in focus amid reports that President Donald Trump is considering a travel ban for all members of the country's Communist Party.
  • European stocks flat as EU leaders hold their first face-to-face summit in months, with a €750 billion coronavirus rescue package, as well as the bloc's €1 trillion budget, up for debate.
  • Oil prices slide as investors fret over global energy demand in the face of new travel and business restrictions triggered by coronavirus case increases.
  • U.S. equity futures suggest a modestly firmer open on Wall Street ahead of earnings from BlackRock, as well as housing starts and building permits data for the month of June at 8:30 am Eastern time.

Wall Street futures drifted higher Friday, while global stocks were mixed in major markets around the world, as investors adopted a cautious stance on risk amid rising coronavirus infections, U.S.-China tensions and a key summit of European leaders later today in Brussels. 

The ongoing resurgence of coronavirus infections, which hit a record peak in Tokyo Thursday and topped 77,300 in the United States, is triggering fresh restrictions on travel, business and social gatherings from Indonesia to Argentina and raising pointed questions over the fate of the nascent global economic recovery.

In the United States, where cases have topped 3.6 million, with more than 138,000 deaths, re-opening plans have paused in  Florida, California and Texas, with other major states, such as New York and Illinois, debating school plans for the coming year and mulling fresh restrictions on inter-state travel. 

That dynamic, along with a what could be a worrying trend in weekly jobless claim filings after yesterday's unchanged tally of 1.3 million for the week of July 11, poked a hole in stock market optimism yesterday, snapping a four-day winning streak for the Dow and setting up a weaker open on Friday, even after stronger-than-expected earnings from Morgan Stanley and online streaming service Netflix Inc.  (NFLX) - Get Report.

Futures contracts tied to the Dow Jones Industrial Average, which slipped 135 points lower yesterday, are priced for a 55 point bump while those linked to the S&P 500 are indicting a 5.5 point advance for the broader benchmark. 

Risk appetite, however, looks in short supply Friday, with investors lifting Treasury bond prices higher, pushing yields on benchmark 10-year notes to 0.602% in overnight trading. The U.S. dollar index, meanwhile, was marked 0.23% lower against a basket of global currency peers, mostly on the strength of the euro, which held at 1.1420 against the dollar ahead of today's EU summit in Brussels.

The leaders' meeting, the first face-to-face gathering since the outbreak of the coronavirus pandemic in February, will discuss both a €750 billion regional rescue package and the bloc's €1 trillion budget proposal for the next six years. 

European stocks were modestly firmer heading into the two-day summit, which may fail to reach an agreement on both spending packages in the face of opposition from Hungary and the Netherlands, with the Stoxx 600 edging 0.10% higher in Frankfurt and Britain's FTSE 100 rising 0.5% in London.

Global oil prices were also in decline, despite this week's agreement within a key advisory group to OPEC leaders on tapering production cuts in the coming months, with traders citing concern for global energy demand in the face of slowing growth and fresh coronavirus business and travel restrictions.

WTI contracts for August delivery, the U.S. benchmark, traded 13 cents lower from their Thursday close in New York and were changing hands at $40.62 per barrel in early European dealing while Brent contracts for August, the global benchmark, were seen 20 cents lower at $43.17 per barrel.

Overnight in Asia, China stocks were mixed, while the yuan held near a one-month low against the dollar, amid reports that President Donald Trump is considering a travel ban on the millions of members of the country's Communist Party, as tensions between Washington and Beijing continue to escalate.

The region-wide MSCI ex-Japan benchmark headed into the close of trading with a modest 0.64% gain, paced by solid gains in Hong Kong and South Korea, while Japan's Nikkei 225 closed lower for a second consecutive session as COVID-19 infections in Tokyo hit a new record high.