The Thursday Market Minute
- Global stocks trade higher as solid corporate earnings offset rising U.S.-China tensions, coronavirus infection concerns.
- China's foreign minister said the U.S. should 'think carefully' about its relationship with Beijing as the two continue to spar over trade and political interference following the closing of the Chinese consulate in Houston.
- European stocks gain on stronger-than-expected bluechip earnings, while Wall Street looks to a busy Thursday session, as well as weekly jobless claims data, to set the day's direction.
- Oil prices gain as the dollar slips lower against its global peers, with the advance held down by a surprise 4.9 million barrel increase in domestic crude stocks, according to Energy Department data.
- U.S. equity futures suggest a firmer open on Wall Street following earnings from AT&T, Dow and Twitter as well as a higher-than-forecast increase in weekly jobless claims to 1.42 million.
U.S. equity futures edged higher Thursday, boosted by robust corporate earnings and weaker dollar, although gains were capped by the latest diplomatic skirmish between Washington and Beijing and the ongoing surge in global coronavirus infections.
Stocks pared gains, however, after Commerce Department data showed a bigger-than-expected 109,000 increase in weekly jobless claims, taking the total to 1.42 million.
European stocks had set the tone in early Thursday trading, with stronger-than-expected second quarter earnings from brand giant Unilever plc (UN) - Get Report and tech bellwether STMicroelectronics (STM) - Get Report adding to broader market optimism following last night's Tesla (TSLA) - Get Report profit, which could catapult Wall Street's hottest stock onto the S&P 500 later this year, and a solid top and bottom line from tech giant Microsoft (MSFT) - Get Report.
The early gains, as well as a 0.15% slide for the U.S. dollar against a basket of its global peers, could set up a modestly firmer open on Wall Street later this morning, although several U.S. bluechips -- including AT&T (T) - Get Report, Travelers (TRV) - Get Report, Dow (DOW) - Get Report and Twitter (TWTR) - Get Report -- will report second quarter earnings before the bell and weekly jobless claims data will be published at 8:30 am Eastern time.
The latter could be the day's most crucial figure, at least until Amazon posts its own quarterly update after the bell, given that a surge in coronavirus infections in the southern and western U.S. has triggered lockdown reversals and business closures in several major American cities, potentially boosting unemployment rolls and slowing the country's economic recovery.
That would likely add further pressure on U.S. lawmakers to come up with a workable coronavirus stimulus package in the coming days, as the key component of the current plan -- paycheck protection payments -- are set to expire next week. House Democrats, however, and Senate Republicans remain divided on how best to construct, and spend, what is likely to be a $1 trillion to $2 trillion rescue bill.
Still, with second quarter earnings mostly beating Wall Street forecasts, central banks pumping billions of dollars into financial assets each and every day and lawmakers poised to pump billions more into the real economy, stocks have largely ignored the economic warning signals of low bond yields, rising gold prices and uneven commodity markets, and have paid little attention to a coronavirus resurgence which has now infected more than 15 million people around the world.
The Dow, which is riding its longest weekly winning streak in seven months, closed above the 27,000 point mark last night for the first time since early June, while the S&P 500 is holding at levels last seen in late February, when the broadest measure of U.S. shares was trading near all-time highs.
Those gains look set to continue Thursday, with contracts tied to the Dow Jones Industrial Average indicating a 15 point opening bell gain and those linked to the S&P 500, which edged into positive territory for the year earlier this week, priced for a small bump to upside.
European stocks were solid, as well, with the Stoxx 600 benchmark rising 0.3% in early Frankfurt trading, paced by a 0.5% gain for the FTSE 100 in London and following on from a firmer session in Asia where the region-wide MSCI ex-Japan benchmark added 0.47% as Tokyo's Nikkei 225 was closed for the country's annual 'Marine Day' holiday.
Tesla shares were marked 4% higher a $1,657.00 each after the electric carmaker eked out a modest second quarter profit, its fourth in succession, that should pave the way for its inclusion on the S&P benchmark.
Microsoft, meanwhile, slipped 1.6% to $208.30 after it's stronger-than-expected second quarter earnings were marred by disappointing sales growth from it's Azure cloud computing division.
A defensive tone continues to color global markets, however, and benchmark 10-year U.S. Treasury bond yields held at 0.592% in overnight trading, dipping under the 0.6% mark for third consecutive session, while gold scaled a new nine-year peak of $1,876.16 per ounce.
Global oil prices were also trading higher, rising nearly 1% across the board, as the dollar sagged against its global peers with gains capped by Energy Department data showing a surprise 4.9 million barrel increase in domestic crude stocks.
WTI contracts for August delivery, the U.S. benchmark, 42 cents higher from their Wednesday close in New York and were changing hands at $42.32 per barrel in early European dealing while Brent contracts for September, the global benchmark, were seen 41 cents higher at $44.70 per barrel.