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Dow Futures Flat As Stimulus Hopes Fade in Election Homestretch; Weekly Jobless Claims Fall to 787,000

Wall Street looks likely to snap a multi-week winning streak heading into the Thursday trading session as stimulus hopes fade, offsetting a better-than-expected reading for weekly jobless claims.

The Thursday Market Minute

  • Global stocks slip lower as near-term hopes for a stimulus agreement from Washington fade heading into the final election homestretch.
  • President Donald Trump says Democrats aren't willing to make a deal that doesn't direct money to 'poorly run' states just hours after Pelosi says talks were progressing well.
  • European stocks slide to one-month low following a grim reading of consumer confidence in Germany and the ongoing rise in coronavirus infection rates around the bloc.
  • The dollar bounces from a seven-week low against its currency peers, while Treasury bond yields rise in anticipation of significant government borrowing in the months ahead.
  • Wall Street futures suggest a softer open following better-than-expected earnings from Coca-Cola and AT&T and weekly jobless claims.

U.S. equity futures remained flat Thursday as a stronger-than-expected reading of weekly jobless claims offset fading hopes for a near-term agreement on stimulus from lawmakers in Washington and a pullback in risk appetite from investors heading into the final election homestretch.

Around 787,000 Americans filed for first time unemployment benefits last week, the Labor Department said Thursday, the lowest since March and much better than the 860,000 forecast. The decline takes the four-week average to around 811,250, which was also stronger than economists had expected.

The gains helped cushion the impact of Tweets from President Donald Trump which came shortly after House Speaker Nancy Pelosi said her talks with Treasury Secretary Steven Mnuchin were progressing, and could result in an agreement that would provide around $2 trillion in coronavirus relief to the U.S. economy, President Donald Trump Tweeted his oft-repeated accusation that too much money would go to "poorly run Democratic cities and states".

With Senate Republicans unlikely to support any deal that authorizes $2 trillion in new spending, and having failed to pass a targeted $500 billion relief bill earlier this week, prospects for a breakthrough look bleak with only twelve days to go before the November 3 vote.

U.S. equity futures look set for a softer open, however, with contracts tied to the Dow Jones Industrial Average, which is down around 1.5 % for the week, priced for a 20 point gain while those linked to the S&P 500, which is up 2.1% for the month, are likely to open 4 points lower at the start of trading.

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European stocks were also showing signs of life in the opening hours of trading in Frankfurt and London, although investors rattled by a weaker-than-forecast reading for German consumer sentiment and the ongoing rise in coronavirus infections, which has triggered new lockdown orders from Ireland to Italy.

The Stoxx 600 benchmark, the region's broadest measure of share prices, was marked 0.01%  higher  while Britain's FTSE 100 gained 0.05% even as the pound rose to a multi-week high of 1.3105 against the greenback amid renewed Brexit trade talks between London and Brussels.

The U.S. dollar index bounced from a seven-week low against its global currency peers Thursday to trade at 92.844 while benchmark 10-year Treasury note yields edged back to a four-month high of 0.818% in anticipation of notably higher government borrowing following the November 3 vote.

Oil prices were on the rise, but only modestly so, following data from the U.S. Energy Department yesterday that showed a surprise increase in gasoline stocks of around 1.9 million barrels, suggesting weak domestic energy demand, and a 1 million barrel decline in overall crude stocks.

WTI contracts for November delivery, the U.S. benchmark, traded 10 cents higher from their Wednesday close in New York and were changing hands at $40.13 per barrel in early European dealing while Brent contracts for December, the global benchmark, were seen 10 cents higher at $41.83 per barrel.

Overnight in Asia, fading stimulus hopes and a weaker close on Wall Street held down gains for regional markets, with the Nikkei 225 in Tokyo falling 0.7% to close at 23,474.27 points and the MSCI ex-Japan benchmark dipping 0.21% lower heading into the close of trading.