The Friday Market Minute

  • Global stocks edge higher, while the U.S. dollar retreats, as investors extend bets on a July Fed rate cut following two days of testimony to Congressional lawmakers from Chairman Jerome Powell.
  • Asia markets cautious ahead of China trade data and a Tweet from President Donald Trump questioning the pace of agricultural purchases by Beijing.
  • European stocks gain, but a surprise profit warning from Daimler reminds investors of significant headwinds for the region's industrial economy.
  • Global oil prices extend gains as Tropical Storm Barry heads towards the Louisiana coast, with evacuations taking more than half of Gulf of Mexico production offline.
  • U.S. equity futures suggest fresh record highs again on Wall Street ahead of factory gate inflation data at 8:30 am Eastern time.

Market Snapshot

U.S. equity futures extended gains Friday, following on from record high closes for both the Dow and the S&P 500 last night, as investors continue to expect interest rate support from the Federal Reserve while betting on underlying strength of the domestic economy.

Fed Chair Jerome Powell repeated his view that U.S. interest rates have room to move lower in the coming months, despite a surprise uptick in consumer prices record for the month of June, telling lawmakers on the Senate Banking committee that historic connections between low unemployment and rising wages and inflation are less evident in the changing U.S economy.

"We're learning that interest rates -- that the neutral interest rate -- is lower than we had thought and I think we're learning that the natural rate of unemployment is lower than we thought," Powell said. "So monetary policy hasn't been as accommodative as we had thought."

With the second quarter earnings season set to kick-off next week, and bets on a July Fed cut that would take its key target rate to a range of 2% to 2.25%, investors have taken U.S. stocks to record highs while simultaneously retreating from fixed income positions both at home and abroad.

Contracts tied to the Dow Jones Industrial Average, which closed about the 27,000 point mark for the first time ever last night, are indicating a further 77 point gain at the opening bell today while those linked to the S&P 500, which also notched a record high close but failed to hold above the 3,000 point mark, are suggesting a 7.4 point advance.

Overnight in Asia, stocks were little-changed throughout the session as investors digested Powell's two-days of testimony on Capitol Hill and awaited key trade and export data from China for the month of June. Investors were also unsettled by a Tweet from President Donald Trump that said China is "letting us down in that they have not been buying the agricultural products from our great Farmers that they said they would." 

Japan's Nikkei 225 ended the session with a 0.2% gain, while the MSCI Asia ex-Japan index slipped 0.02% heading into the close of trading.

European stocks traded modestly higher at the opening bell Friday, although Germany's DAX index was held down by a profit warning from Daimler AG (DMLRY) , which pulled domestic and European automakers lower at the start of trading.

The Stoxx Europe 600 index edged 0.07% higher, while Britian's FTSE 100 notched a firmer 0.14% gain, with the DAX slipping 0.1% thanks to a 3.5% slump for Mercedes-maker Daimler and a 1.1% slide for domestic rival Volkswagen AG (VLKAY) .

Global oil prices extended gains for a third consecutive session, lifting U.S. crude prices to fresh six-week highs, as estimates indicated that nearly half of domestic oil production in the Gulf of Mexico, which accounts for around a fifth of the U.S. total, has been taken offline as staff evacuate rigs and platforms in the face of Tropical Storm Barry, which is bearing down on the Louisiana-Texas coast and expected to make landfall later this weekend. 

Brent crude contracts for September delivery, the global benchmark, were seen 66 cents higher from their Wednesday close and changing hands at $67.18 per barrel in early European trading while WTI contracts for August, which are more tightly linked to U.S. gas prices, were marked 48 cents higher at $60.68 per barrel.