The Thursday Market Minute
- Global stocks rally, while U.S. equity futures point to fresh record highs on Wall Street, as China moves to both contain the coronavirus spread and cut tariffs on U.S.-made goods to help bolster its economic response.
- China's tariff reductions, while linked to the December Phase 1 trade agreement, suggest its prepared to meeting commitments on agricultural and energy purchases this year despite the expected coronavirus slump.
- Health authorities confirm another 3,000 cases, taking the China-based total over 28,000, but a lower fatality rate and slowing infections suggests it could be starting to find containment.
- European stocks hit fresh record highs as basic resource and energy stock rally on China tariff news, while a stronger U.S. dollar pushed euro and pound lower in early foreign exchange trading.
- U.S. equity futures suggest a record-setting open on Wall Street ahead of weekly jobless claims data at 8:30 am Easter time and earnings from Bristol-Myers, Twitter and Kellogg before the start of trading.
U.S. equity futures are pointing to fresh record highs for all three Wall Street benchmarks Thursday as investors extend a global market rally built on improving economic data, China's moves to contain and counteract the coronavirus and the Senate impeachment acquittal of President Donald Trump.
Futures were also supported by a better-than-expected reading for weekly jobless claims, which fell by 15,000, and a modest reading of unit wage costs, which suggest little inflation pressures heading into tomorrow's January payroll reading.
China's National Health Commission confirmed another 3,000 coronavirus cases overnight, taking the total to just over 28,000, while adding that as many as 563 people have died as a result of the respiratory-related illness.
The rate of infection, however, appears to be stabillizing, while at the same time health officials say its mortality rate, at just over 2%, makes it far less lethal than the SARS outbreak of 2003, which killed 800 people around the world.
China also took further steps to shore-up its economy, and boost investor confidence, by slashing tariffs on U.S.-made imports as part of December's Phase 1 trade agreement as of February 14. The move suggests China is prepared to meet commitments on agricultural and energy purchases linked to the deal, despite the expected first quarter growth weakness, once the virus is contained.
Global investors used the China tariff decision, as well as yesterday's stronger-than-expected readings for private sector job creation and service sector growth in the United States, to extend last night's rally on Wall Street. The U.S> Senate's decision to acquit President Trump on impeachment charges, while expected, also removed a key political uncertainty heading into this fall's elections.
With a string of positive headlines as a tailwind, U.S. equity futures are suggesting a triple set of record highs on Wall Street Thursday, with contracts tied to the Dow Jones Industrial Average indicating a 135 point opening bell gain while those linked to the S&P 500 are guiding for a 15 point advance for the broader benchmark.
Nasdaq Composite futures suggest the tech-focused index, which closed at an all-time high last night, are priced for a 46 point gain.
European stocks were also in a record-setting mood Thursday, with the Stoxx 600 rising 0.67% to a fresh all-time peak of 426.46 points in early Frankfurt trading, helped in part by a weaker euro and solid gains for basic resource and energy stocks linked to China's tariff reductions, before paring that advance to around 0.25%.
Britain's FTSE 100, meanwhile, was marked 0.1% higher in London as the pound eased to 1.2984 against the stronger U.S. dollar.
Overnight in Asia, China stocks paced gains in the region following a series of moves by the government this week -- including today's confirmation on tariff reductions -- to support banks and financial markets, while a weaker yen and a stronger-than-expected full year profit outlook for Toyota Motor Co. TM boosted stocks in Japan.
The region wide MSCI ex-Japan index was marked 1.6% higher heading into the close of trading while the Nikkei 225 booked a 2.4% gain to close at 23,873.59 points.
Global oil prices were also on the march, rising more than 1.6% amid reports that advisers to leaders of OPEC member countries will likely suggest the cartel deepen its agreement on production cuts when they meet next month in Vienna by a further 500,00 barrels per day in order to help stabilize crude prices following their recent 20% slide into bear market territory.
Brent crude futures contracts for April delivery, the global benchmark for pricing, were last see seen 31 cents higher from their Wednesday close in New York and trading at $55.59 per barrel, while WTI contracts for the same month were seen 62 centws higher at $51.37 per barrel.