The Friday Market Minute
- Global stocks gain as investors see improving growth prospects in the wake of the COVID-19 pandemic, while rising U.S. infection rates puts Wall Street on edge.
- U.S. infections rise by nearly 40,000 Thursday, the biggest single-day gain on record, as the potential for a second wave of the pandemic continues to escalate.
- Texas suspends its re-opening plans, California declares a budget emergency and Apple closes 14 stores in Florida as hospitalizations and new cases increase.
- The dollar is set for its first weekly fall in three as investors bet on more Fed stimulus if U.S. states stall or reverse re-opening plans.
- U.S. equity futures suggest a mixed open for Wall Street ahead of personal spending data at 8:30 am Eastern time.
U.S. equity futures traded lower Friday, contrasting solid gains in stock markets around the world, following data showing the biggest single-day increase in coronavirus cases on record and more sings that a second wave of the pandemic could shutter portions of the economy.
Reported U.S. coronavirus cases rose by just under 40,000 yesterday, the largest on record, lead by a surge in infections in various southern states as well as California and Arizona. The spike has also been followed by record rates of hospitalizations, with Texas record new daily highs for the past two weeks, a move significant enough for Governor Greg Abbott to suspend the state's re-opening plans.
"As we experience an increase in both positive COVID-19 cases and hospitalizations, we are focused on strategies that slow the spread of this virus while also allowing Texans to continue earning a paycheck to support their families," Abbott said in a statement.
In California, Governor Gavin Newsom declared a budget emergency as the state grapples with a growing wave of new infections, while in Florida, tech giant Apple Inc. (AAPL) - Get Report said it was closing at least 14 stores in the state as cases and hospitalizations continue to rise.
The developing mosaic puts the U.S. at the forefront of a global resurgence in the deadly disease, although major economies in Europe and Asia are looking to ease lockdown and travel restrictions in the coming days as their pandemic efforts appear to have slowed its spread over the past three weeks.
U.S. equity futures, then, look set to open weaker against a backdrop of solid global gains, with contracts tied to the Dow Jones Industrial Average indicating a 215 point decline and those linked to the S&P 500, which has gained 1.3% so far this month, priced for a 13.5 point pullback.
Equity market volatility, however, remains elevated, with the CBOE's VIX index trading at 33.5 points, a level that suggests the potential for a daily swing of around 55 pints for the S&P 500.
Investors may also be betting that the Federal Reserve will add to its $7 trillion balance sheet with even more financial stimulus if the economy experiences a second wave of closures, which may explain the dollar's 0.05% dip against a basket of its global peers, putting the index on pace for its largest weekly fall in three.
European stocks, however, were firmly higher in the opening hours of trading, lead by a 1.5% gain for the FTSE 100 and a 1.41% rise for the regional Stoxx 600 benchmark, after European Central Bank President Christine Lagarde said the worst of the pandemic's impact has likely passed.
Oil prices, too, traded higher in the early European session, with investors citing improving demand prospects in major economies around the world, as well as a weaker dollar, which is used to price crude transactions.
WTI contracts for August delivery, the U.S. benchmark, traded 37 cents higher from their Thursday close in New York to change hands at $39.09 per barrel in early European dealing while Brent contracts for August, the global benchmark, were seen 46 cents lower at $41.51 per barrel.
Overnight in Asia, Japan's Nikkei 225 followed the last rally on Wall Street to close 1.13% higher at 22,424.37 points while the region-wide MSCI ex-Japan benchmark was seen 0.3% higher heading into the close of trading on the strength of gains in Australia and South Korea.