The Friday Market Minute

  • Global stocks mixed, Wall Street flat as investors ride out a central-bank dominated week with a focus on further stimulus.
  • Wall Street eyes headlines from U.S.-China trade talks in Washington while markets fade bets on near-term Fed rate cuts after Wednesday's 'hawkish' cut.
  • Asia stocks get a boost from a modest lending rate reduction China, as well as a massive tax cut in India that has the Sensex benchmark surging more than 5%.
  • Oil prices edge higher, taking weekly gains past 7% both both Brent and WTI crude contracts, a Gulf region tensions continue to escalate following last Saturday's attacks on two Saudi oil facilities.
  • Wall Street futures suggest modest opening bell declines for the the Dow ahead of two Fed speakers -- John Williams and Eric Rosengren -- later this morning. 

Market Snapshot

Global stocks traded higher Friday, with tax and interest rate cuts boosting markets in Asia, with Wall Street looking to open firmer a s investors debate the Federal Reserve's next policy move and look for progress from the current round of U.S.-China trade talks.

Deputy trade leaders from both Washington and Beijing will conclude two-days of talks today near the White House, with discussions mostly focused on agriculture, as the world's two biggest economies attempt to build more goodwill heading into next month's top-level negotiations in Beijing. 

With both sides offering conciliatory delays on tariffs, and agreeing to the first face-to-face talks since late June, investors are hoping the market's main risk overhang could soon be settled, allowing the strength of recent central bank rate cuts, including this week's 25 basis point rate cut from the Fed, to drive stocks higher between now and the end of the year.

Further Fed moves, of course, would allow U.S. benchmarks to ride past record highs in the meantime, but with Wednesday's decision colored by variety of views from FOMC members, investors are uncertain as to how the central bank will react in the coming months. The CME Group's FedWatch toll suggests traders are only pricing in a 50% chance of another rate cut this year.

With FOMC voting members John Williams and Eric Rosengren speaking later today, investors may get more clues as to the central bank's next steps, but with no major earnings or economic data releases on tap, U.S. equity futures suggest a tepid open on Wall Street.

Contracts tied to the Dow Jones Industrial Average is slated to open modestly higher from last night's closing levels, with a 40 point gain, while the broader S&P 500, which has gained just under 20% so far this year, is priced for a 4 point bump higher.

The Fed will also conduct is four consecutive repo operation later today, offering another $75 billion in cash at its new rate of 1.7% in order to maintain the current Fed Funds rate at its reduced range of $1.75% to 2% following Wednesday's cut.

The NY Fed has pumped just over $200 billion into the system this week following a worrying spike in overnight borrowing costs that has disrupted Wall Street's intrabank lending markets. Demand for each of the three repo auctions have increased steadily, with banks bidding for $83 billion in funds yesterday at the reduced repo rate.  

European stocks were modestly firmer by mid-day in Frankfurt, with the Stoxx 600 rising 0.25% to extend its month-to-date advance past 3.5%. Britain's FTSE 100, however, was marked 0.1% lower as the pound jumped to 1.2525 against the U.S. dollar following comments from outgoing European Commission President Jean-Claude Juncker that suggested the possibility of a breakthrough in Brexit talks.

Overnight in Asia, Japan's Nikkei 225 added 0.16% as the benchmark neared 2019 highs following signals of an October interest rate cut from the Bank of Japan yesterday, while a modest reduction in China's one-year lending rate kept markets in Shanghai and Shenzen from closing in the red. 

The larger move in the region, however, came from stocks in India, where the finance minister Nirmala Sitharaman announced a major corporate tax cut that sent the country's Sensex index benchmark 5% higher by mid-day trading in Mumbai.

Global oil prices extended their recent gains Friday, lifting benchmark Brent crude to a week-to-date gain of nearly 7%, as investors continue to price in an extended delay in production from last Saturday's attacks on two Saudi oil facilities, while Tropical Storm Imelda's torrential rains slows some refining output in the Gulf of Mexico.

Brent crude contracts for November delivery, the global benchmark, were seen 40 cents higher from their Thursday close in New York and changing hands at $64.80 per barrel in early European trading, a move that takes their weekly gain past 7.7%

WTI contracts for the same month, which are more tightly linked with U.S. gasoline prices, were marked 47 cents higher at $58.66 per barrel and have risen 7.05% since last Friday's close.