The Thursday Market Minute

  • Global stocks slide, while the dollar climbs to a two-year peak, as investors parse through the first Fed rate cut in more than a decade.
  • President Donald Trump criticizes the Fed move, saying Chairman Jay Powell "let us down" by not signaling a series of rate cuts. 
  • European shares edge higher as the euro slides to a 26-month low of 1.1040 while the pound tests fresh two-and-a-half year lows of 1.1215.
  • Oil snaps a five-day winning streak after Energy Department data shows domestic production jumped to 12.2 million barrels per day last week
  • U.S. equity futures suggest modest opening bell gains on Wall Street ahead of earnings from General Motors,  DuPont and Verizon as well as weekly jobless claims data at 8:30 am Eastern time.

Market Snapshot

U.S. equity futures nudged higher Thursday, while the dollar climbed to its highest levels on global foreign exchange markets in two years, as investors continue to parse through the implications of the first Federal Reserve rate cut in more than a decade.

Fed Chairman Jerome Powell and his colleagues voted 8-2 to lower the central bank's key lending rate by 25 basis points to a range of 2% to 2.25%, a move that was fully in-line with market expectations, citing "the implications of global developments for the economic outlook as well as muted inflation pressures."

However, Powell told reporters in Washington that while the July move was "not the beginning of a long series of rate cuts", he also stressed that ""I didn't say it's just one rate cut."

The contradictory commentary was ultimately interpreted as a "mid-cycle adjusted", a term Powell used in his press conference, with markets hiving more than 330 points from the Dow Jones Industrial Average -- the biggest decline in two months -- and sending the dollar index, a benchmark of the greenback against a basket of its global peers, past a two-year peak of 98.85 in overnight trading. 

President Donald Trump lashed out at the decision, saying Powell "let us down" by failing to signal a series of rate cuts but praised the bank for calling an end to its balance sheet run-off.

Still, U.S. equity futures are looking to rebound Thursday as investors shift focus to a stronger-than-expected corporate earnings season, which has seen 75% the close to 300 of reporting S&P 500 companies top Street forecasts, as well as tomorrow's July jobs report from the Bureau of Labor Statistics. 

Contracts linked to the Dow are suggesting a 90 point opening bell bounce while those tied to the S&P 500, which dipped below 3,000 last night but has booked two consecutive monthly gains, are indicating a 7 point gain.

Overnight in Asia, the dollar's strength pushed the yen to 109.03, a move that supported export stocks on the Nikkei 225 and allowed the benchmark to close little-changed on the session even as stocks in the Asia region shed nearly 1% in the global sell-off.

European stocks were also supported by a weaker euro, which fell to a near 26-month low of 1.1045 against the greenback, lifting the Stoxx 600 benchmark 0.1% higher in Frankfurt even as PMI data confirmed the steepest contraction in factory output over the month of July since 2012.

The pound was also on the back foot, slumping to a two-and-a-half year low of 1.2115 against the surging dollar, although the move failed to help the FTSE 100, which fell 0.3% by mid-morning in London.

The dollar's strength also pushed global oil prices lower overnight as trader snapped a five-day winning streak after U.S. Energy Department data showed domestic output leaped to 12.2 million barrels per day last week as drillers in the Gulf region returned to full production mode following last month's tropical storm.

Brent crude contracts for September delivery, the global benchmark, were seen 69 cents lower from their Wednesday close and changing hands at $64.36 per barrel while WTI contracts for the same month, which are more tightly linked to U.S. gas prices, were marked 68 cents lower at $57.90 per barrel.