The Thursday Market Minute

  • U.S. equity futures edge higher as improving geopolitics, and the hope of further monetary easing, boosts global stocks.
  • Factory activity data in Europe and Japan continued to weaker in October, stepping up pressure on the ECB and the BoJ to add fresh stimulus.
  • The ECB meets later today in Frankfurt for the final policy gathering under the eight year term of President Mario Draghi.
  • Earnings season continues to dominate U.S. market sentiment, with corporate profits set to decline by around 2.9% from last year now that around a quarter of the S&P 500 has reported.
  • US equity futures suggest modest opening bell declines on Wall Street ahead of earnings from 3M, Comcast, Visa, American Airlines, Twitter before the start of trading and Intel and Amazon after the closing bell.

Market Snapshot

U.S. equity futures edged higher Thursday, while global stocks built modest gain across the board, as improving geopolitical sentiment and the prospect of more monetary easing from major central banks offset persistent trade-related weakness in factory output.

Manufacturing activity data from both Europe and Japan continued to weaken in October, according to data published Friday, teeing up the possibility for further support from both the European Central Bank, which meets later today in Frankfurt, and the Bank of Japan, which begins its two-day policy gathering on October 30.

The potential of further easing was buttressed by an improving geopolitical backdrop, with President Donald Trump declaring a 'permanent ceasefire' in Syria and lifting sanctions on Turkey, and Britain edging closer to a conclusion in its years-long Brexit saga with the prospect of a near-term general election.

U.S. equity futures, however, were indicated only modestly higher in early European hours as investors prepped for another heavy slate of corporate earnings -- the busiest of the season with 45 companies reporting -- and PMI data for the month of October that could echo the seven-year low recorded during the peak of the U.S.-China trade dispute in September.

Contracts tied to the Dow Jones Industrial Average suggest only a 57 point bump at the opening bell, following last night's rally that lifted the benchmark to a year-to-date gain of 15%, while those linked to the S&P 500 are indicating a 7 point gain amid earnings from 3M (MMM) - Get Report , American Airlines Group (AAL) - Get Report , Comcast Corp. (CMCSA) - Get Report  and Twitter Inc. (TWTR) - Get Report prior to the start of trading.

Tesla Inc. (TSLA) - Get Report shares surged higher Thursday, setting up the best single-day gain in six years, after the clean energy carmaker posted a surprise third quarter profit and reaffirmed delivery targets for the full year.

Twitter, on the other hand, plunged 20% after it posted weaker-than-expected third quarter earnings Thursday, and forecast softer revenue growth for the final months of the year.

Earnings, however, haven't provided a great deal of support for U.S. stocks this season, and with around a quarter of the S&P 500 reporting so far, the collective bottom line of the biggest American companies is expected to fall 2.9% from last year, marking the weakest quarter since 2016.

European earnings have been far worse, however, and are on pace to decline 5.3% from the third quarter of 2018 as the economy slows and the protracted trade disputes continue to blunt manufacturing activity.

This, alongside a reluctance from major European economies to increase spending -- despite negative borrowing rates that would mean little cost to taxpayers -- in order to stoke economic growth has added further pressure on the ECB, which was forced last month to re-start its quantitative easing program in order to attempt another run at its often-missed inflation target of 'just below 2%'.

The ECB meets today in Frankfurt, marking the final gathering of President Mario Draghi's eight year term as he makes way for incoming leader Christine Lagarde.

Europe's benchmark Stoxx 600 index was marked 0.6% higher by mid-day trade, boosted by gains for auto stocks after stronger-than-expected third quarter earnings from luxury carmaker Daimler AG (DMLRY) , while Britain's FTSE 100 added 0.6%.

Global oil prices eased from a rare two-day rally Thursday, taking Brent crude past the $60 mark, after Energy Department data showed a surprise 1.7 million barrel decline in domestic crude stocks last week, suggesting a modest increase in demand now that trade tensions between the U.S. and China are beginning to thaw.

Brent crude contracts for December delivery were seen 1 cent lower from Wednesday's New York close to trade at $60.16 per barrel, while WTI contracts for the same month were marked 5 cents lower at $55.92 per barrel.