The Thursday Market Minute
- Global stocks edge cautiously higher after stronger-than-expected China trade data and a firmer fixing for the yuan ease concerns for the fate of the world economy
- Asia stocks gains after China says July exports rose 3.3$ from last year, even as imports slowed, but a record high U.S. trade surplus of $168.5 billion over the first seven months of the year highlights the complexity of dealing with the world's second-largest economy.
- U.S. 10-year Treasury yields rise to 1.71%, as government bond markets around the world retrace some of yesterday's rally amid a cautious return to risk markets and a firmer start to equity trading in Europe.
- Global oil prices rebound from seven month lows, even as crude remains in bear market territory, amid a report that Saudi Arabia might be looking at ways to stem recent market declines.
- Wall Street futures suggests further opening bell declines Wednesday ahead of earnings from CBS, Viacom, Kraft Heinz and Activision Blizzard as well as weekly jobless claims data at 8:30 am Eastern time.
U.S. equity futures extended their late session rebound Thursday, while global government bond yields eased from multi-year lows, following stronger-than-expected export data from China and a cautious return to risk markets from investors in major economies around the world.
China's July exports rose 3.3% from last year, even as imports slowed by 5.6% amid weakening domestic demand and a broader consumer push for made-in-China good. China's U.S. exports fell 6.5% from last year, Customs officials said, and its trade surplus narrowed to $27.97 billion, but it's year-to-July tally of $168.5 billion remains $7.2 billion north of last year and the highest on record, even in the face of tariffs that affect nearly $250 billion in goods from Beijing.
The stronger China data, as well as a creeping return of risk sentiment following last night's late-hour rally on Wall Street boosted stock in Asia overnight and offset concerns linked to China's latest yuan peg, which set the mid-point for its currency at $7.0039, the first time officials have breached the $7 threshold -- as opposed to foreign exchange traders -- since April 2008.
Still, the fixing was broadly stronger than markets had anticipated, and the move appeared to ease concerns that Beijing would provoke a reaction from President Donald Trump after he falsely claimed yesterday that China had "admitted" it was manipulating its currency and told reporters in Washington the country was "killing" the United States "with unfair trade deals".
U.S. equity future reacted in kind, with contracts tied to the Dow Jones Industrial Average now suggesting a 76 point opening bell gain for the 30-stock average while those linked to the S&P 500 are indicating a 10.5 point advance for the broader benchmark.
Roku Inc. (ROKU) - Get Report shares are set to open at an all-time high after the media streaming platform posted a narrower-than-expected second quarter loss as its user based topped 30 million and pricing improved.
Symantec Corp. (SYMC) - Get Report shares were another notable early market mover, surging 14% amid reports that chipmaker Broadcom (AVGO) - Get Report is in advanced talks to buy the cybersecurity firm's enterprise business after the two side abandoned takeover talks last month.
Investors are also noting the supportive fundamentals for U.S. stocks, including a stronger-than-expected third quarter earnings season that has delivered collective bottom-line growth of 2.7%, according to Refinitiv data, and an S&P 500 dividend yield of 1.73%, which sits just north of today's trading yield for 10-year U.S. Treasury notes.
Bond yields around the world, in fact, eased in overnight trading, with benchmark 10-year German bunds trading at -0.56% after hitting an all-time trough of -0.601% in Wednesday's historic session. This week's moves, however, had not only pulled more than $14 trillion worth of global fixed income products into negative yield territory, they've also lowered the world's average mid-term borrowing costs to an all-time low of 1.44%.
European stocks opened firmer in Frankfurt and London, with the Stoxx 600 benchmark rising 0.88% by mid-day and Britain's FTSE 100 rising 0.22% as basic resource stocks outperformed on the better-than-expected China data and the pound steadied at 1.2153 against the U.S. dollar.
Adidas AG (ADS) - Get Report shares slumped to the bottom of the German market after the world's second-largest sportswear group posted weaker-than-expected second quarter sales as growth in north America slowed.
Global oil prices also rebounded from seven-month lows in overnight trading, reversing at least some of yesterday's 5% decline that pulled crude into bear market territory on the heels of weakening world demand and a surprise build of 2.39 million barrels in domestic U.S. stockpiles.
Brent crude contracts for October delivery, the global benchmark, were seen 90 cents higher from their Wednesday close and changing hands at $57.13 per barrel while WTI contracts for September, which are more tightly linked to U.S. gas prices, were marked $1.16 higher at $52.25 per barrel.