The Friday Market Minute
- Global stocks retreat as investors await the first formal U.S. response to the China's Hong Kong security bill.
- President Trump will hold a news conference later today, with analysts expecting some form of retaliation for the move to tighten its grip on the island city.
- European stocks slide, while the euro hits a fresh two-month high against a weaker dollar as investors cheer the region's €750 billion coronavirus rescue package.
- Oil prices slide after EIA data shows near-record domestic crude stocks and traders book profits from the best trading month since 1999.
- U.S. equity futures suggest a modestly weaker open ahead of April inflation and spending data at 8:30 am Eastern time.
Wall Street futures were mixed Friday, following on from a weaker session for stocks in major markets around the world, as investors looked to a statement from President Donald Trump on Hong Kong that could dramatically increase the already simmering tensions between Washington and Beijing.
Trump is set to outline his administration's response to China's Hong Kong security bill during a press conference later today, with analysts expecting anything from the scrapping of the phase 1 trade deal to increased tariffs on China-made goods or sanctions on communist party officials.
Hong Kong's government, meanwhile, urged the U.S. not to revoke its special status as a semi-autonomous region, arguing it would harm both economies while strengthening Beijing.
The potential for a further escalation in U.S.-China tensions, which began in early Spring as Trump attacked its handling of the coronavirus outbreak after earlier praising its decisiveness, could derail what has been an impressive really for U.S. stocks over the past two months.
Wall Street pulled back from recent gains Thursday, following data indicating that nearly 42 million American jobs have been lost to the COVID-19 pandemic since March 21, but the S&P 500, the broadest measure of U.S. stocks, is more than 35% higher than its March 23 nadir while the Dow Jones Industrial Average sits firmly about the 25,000 mark.
Contracts tied to the Dow suggest a modest Friday retreat with futures suggesting a 70 point opening bell decline, while those linked to the S&P 500 are indicating a 2 point bump to the downside.
Oil prices were a better indicator of the 'risk off' mood in markets Friday, with both WTI and Brent futures sliding nearly 3% after data from the Energy Department Thursday showed a surprise increase in domestic crude stocks of 8.7 million barrels, a tally that lifted overall supplies to a near-record high of 534.4 million barrels.
However, much like stocks, oil prices have largely shrugged-off grim economic data and broader demand concerns to record one of the strongest monthly gains on record, with WTI futures rising 76% and Brent contracts rising 38%, the most since 1999.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.4% lower at 98.02, but that was largely the result of another lurch forward for the euro, which traded at a fresh two-month high of 1.1134 as investors cheered the EU's €750 billion coronavirus rescue package.
European stocks, however, were in retreat on the risk-off Friday, with the Stoxx 600 falling 0.7% as the trade-sensitive DAX fell 0.8% and Britain's FTSE 100 retreated 0.9% by mid-afternoon trading in London.
Overnight in Asia, Hong Kong's Hang Seng index ended the session 0.74% lower at 22,961.47 points as investors awaited the official response to the China security bill from President Trump, while the regoin-wide MSCI ex-Japan index was marked 0.2% lower heading into the final hours of trading.
Japan's Nikkei 225 ended the week 0.18% lower at 21,877.89 points.