The Thursday Market Minute

  • Global stocks sputtered Thursday, tugging Wall Street futures into the red, as investors held onto hopes of Fed rate bets amid a slowing world economy.
  • President Donald Trump continues his European tour with a visit to Normandy to mark the 75th anniversary of D-Day, telling reporters he is ready to place more tariffs on China if necessary.
  • European stocks booked modest gains as investors prepped for a key ECB rate decision later today in Vilnius, with more easing talk expected from President Mario Draghi.
  • Global oil prices edge higher after slipping into bear market territory yesterday, although record U.S. production and swelling stockpiles capped market gains.
  • Wall Street futures suggest modest opening bell gains, following the second largest two-day advance of the year, ahead of weekly employment and monthly exports data at 8:30 am Eastern time.

Market Snapshot

U.S. stock futures edged higher Thursday as investors held onto bets of near-term rate cuts from the Federal Reserve and focused on developments in the myriad trade disputes being waged by the White House and fretted over troubling signs of a slowdown in the world's biggest economy.

President Donald Trump said late Thursday that "not nearly enough" progress had been made in talks between U.S. and Mexican officials aimed at solving a simmering border crisis that has seen more than 132,000 migrants arrested over the past month, the largest in a decade, and raised tensions between Washington and its biggest trading partner.

With the threat of tariffs on all Mexican imports looming on June 10, and officials within the government of Andrés Manuel López Obrador preparing a list of products it will hit with reprisal levies that is aimed at Trump-supporting states, investors are growing increasingly concerned that this latest trade spat will further derail a fragile global economy.

....talks with Mexico will resume tomorrow with the understanding that, if no agreement is reached, Tariffs at the 5% level will begin on Monday, with monthly increases as per schedule. The higher the Tariffs go, the higher the number of companies that will move back to the USA!

— Donald J. Trump (@realDonaldTrump) June 5, 2019

Trump also repeated his threat to slap tariffs on a further $300 billion in China-made goods, after authorizing an increased levy on $200 billion in imports last month, while speaking to reporters ahead of a visit to Normandy to mark the 75th anniversary of D-Day.

"Our talks with China, a lot of interesting things are happening. We'll see what happens. I could go up another at least $300 billion and I'll do that at the right time," Trump said. "But I think China wants to make a deal and I think Mexico wants to make a deal badly."

U.S. stocks, which booked their second-largest two-day gain of the year this week amid hopes of a near-term rate move from the Fed, edged higher in overnight trading even as bond yields fell and investors took an increasingly defensive tone ahead of weekly jobless data later in the session.

Contracts tied to the Dow Jones Industrial Average are indicating a 90 point opening bell advance as a result, while those linked to the S&P 500 suggest a 10 point bump for the broader benchmark. 

Tesla Inc. (TSLA - Get Report) shares are on pace for their biggest three-day gain since October amid reports that a massive push to drive end-of-quarter sales could lead to record delivers for Elon Musk's clean-energy carmaker.

European stocks were also firmer at the start of trading in Frankfurt, with investors betting on support ahead of today's European Central Bank rate setting meeting in the Lithuanian capital of Vilnius. 

ECB President Mario Draghi will unveil fresh growth and inflation forecasts at the so-called offsite meeting, which typically occurs once each year, and it also expected to announce a new targeted lending program that will encourage banks to borrow from the ECB and lend it into the real economy.

The Stoxx 600 benchmark added 0.6% by mid-day in Frankfurt trading as the euro drifted to 1.1226 against the greenback, while Britain's FTSE 100 was marked 0.7% to the upside as the pound dipped to 1.2677.

Renault SA (RNLSY) shares plunged to the bottom of the European market, falling more than 7%,  after rival Fiat Chrysler Automobiles NV (FCA - Get Report) pulled out of a planned $35 billion merger amid accusations of meddling by the French government.

Overnight in Asia, weakness in China shares pulled the MSCI ex-Japan index 0.21% lower into the final hours of trading, while Japan's Nikkei 225 ended the session little-changed at 20,744.04 points as the yen continued to gain against the U.S. dollar in safe-haven trading.

Away from equities, benchmark 10-year U.S. Treasury bond yields held near a September 2017 low of 2.102% overnight following yesterday's ADP employment reading, which showed much-slower-than-expected May job additions of 27,000, the lowest since 2010.

Benchmark German bunds, meanwhile, traded at a record low of -0.227% heading into the ECB rate decision at 7:45 am Eastern time.

Global oil prices edged modestly higher in overnight trading, however, as the U.S. dollar sagged amid bets on multiple Fed rate hikes and traders rushed to snap up cheap crude after both Brent and WTI contracts slipped into bear market territory yesterday.

Both contracts have fallen more than 20% from their late April peak amid concerns over slowing global demand and rising U.S. production, which hit a record 12.4 million barrels last week, according to Energy Information Administration data published yesterday, a figure that helped swell domestic stockpiles by a massive 6.8 million barrels  -- the most since 1990 -- to a near two-year high of 483.2 million.

Brent crude contracts for August delivery, the new global benchmark, were seen 67 cents higher from from their Wednesday close in New York and changing hands at $61.3 per barrel while WTI contracts for the July were marked 38 cents higher at $52.07 per barrel.