The Wednesday Market Minute
- Global stocks mixed but marching broadly higher as investor optimism for an end to the coronavirus pandemic continues to trump concerns for a flare-up in U.S.-China tensions.
- Fresh protests in Hong Kong as citizens prepare for a Thursday vote in Beijing over a new security bill; President Donald Trump hints at a formal response later this week.
- Bank stocks lead Europe higher after bullish comments on sector valuations from JPMorgan CEO Jamie Dimon.
- European Commission, the region's executive branch, prepares €750 billion are rescue package funded by collective borrowing.
- Oil prices ease ahead of API and EIA stock data over the next two days as investors trim bets on renewed crude demand.
- U.S. equity futures extend gains, setting up the S&P 500 for another run past the 3,000 point mark and the Dow for its highest intra-day trading levels since March 10.
U.S. equity futures extended gains Wednesday as investors continue to drive global markets higher as coronavirus infection rates ease and economies re-open, while simmering tensions between Washington and Beijing boosted gains for safe-haven assets such as Treasuries and the dollar.
Stocks continued their surprising march higher in overnight trading as yesterday's rally on Wall Street washed over into the Asia and European sessions, built largely on trillions in government and central bank stimulus and the hope that easing lockdown and travel restrictions will slowly return major economies to normal levels of activity later in the year.
The cautious element to overnight trading, however, was the result of more protests in Hong Kong against China's plans to tighten its grip on security in the semi-autonomous region and President Donald Trump's suggestion that it could lose its status as an international financial center if Beijing follows-through with its planned legislation later this week.
"We're doing something now. I think you'll find it very interesting," Trump told reporters in Washington when asked if the U.S. would apply new sanctions on China. "I'll be talking about it over the next couple of days."
The comments gave a boost to the U.S. dollar, which rose 0.2% against a basket of its global peers in overnight trading, while benchmark 10-year Treasury note yields, which move in the opposite direction of prices, fell to 0.69% as traders looked to take some risk out of the market.
Stocks, however, continued to power ahead, with contracts tied to the Dow Jones Industrial Average priced for a 420 point opening bell gain, a move that would take the 30-stock average to the highest levels since March 10 and more than 35% higher from its March 23 trough.
Contracts tied to the S&P 500, meanwhile, are set for a 43 point advance after the broader benchmark failed to close above the 3,000 point mark last night.
European stocks were off to a solid start in Frankfurt and London, with banks leading the gains following yesterday's bullish assessment of the sector from JPMorgan Chase & Co. (JPM) - Get Report CEO Jamie Dimon during an industry conference hosted by Deutsche Bank (DB) - Get Report.
Stocks were also boosted by a Tweet from European Commissioner Paolo Gentiloni, who said the executive branch of the European Union would propose a new €500 billion stimulus package, alongside €250 billion in loans, to support the region's economic recovery.
The Stoxx 600 index, the region's broadest measure of share prices, was seen 0.9% higher in early Wednesday trading, paced by a 1.87% gain for the DAX performance index in Germany and a 1.5% gain for the bank-heavy FTSE 100 benchmark in London.
Oil prices drifted lower, however, as the dollar gained and investors prepped for data on U.S. crude stockpiles later today from the American Petroleum Institute, with Brent crude futures for July delivery falling 46 cents per barrel to $35.71 and WTI futures for the same month marked 32 cents lower from Tuesday's close at $34.03 per barrel.
Asia stocks were little-changed in overnight trading, with the MSCI ex-Japan benchmark slipped 0.07% into the final hours of trading as China stocks fell amid concerns over the risk of U.S. sanctions amid fresh protests in Hong Kong, while Japan's Nikkei 225 managed a 0.7% gain as the country continues to ease coronavirus restrictions while planning a renewed stimulus push in the world's third-largest economy.