The Thursday Market Minute

  • Global stocks retreated amid concern for the fate of U.S.-China trade talks as Beijing says tariffs are an import pre-condition to any phase one agreement.
  • Weak China industrial output is offset by data from Germany showing Europe's largest economy avoided recession with modest Q3 growth and a revised Q2 reading.
  • Fed Chair Jerome Powell says negative interest rates aren't needed in the US, and tells lawmakers that monetary policy will remain in place unless there is a 'material' chainge in the economic outlook.
  • US equity futures suggest modest opening bell declines on Wall Street ahead of earnings from Walmart and Viacom as well as October factory gate inflation data at 8:30 am Eastern Time.

Market Snapshot

Wall Street futures were slipped lower Thursday, following on from a modestly weaker session for global stocks, as investors reacted to reports of a snag in US-China trade talks and mixed data from two of the world's biggest exporters.

China's Commerce Ministry said Thursday that the cancellation of U.S tariffs was a significant condition for a phase one trade agreement, casting doubt on the level of progress in talks between Washington and Beijing.

The remarks followed President Donald Trump's speech to the Economic Club of New York yesterday in which he raised the specter of fresh levies on China-made goods if the two sides are unable to reach a broad agreement on trade. The Wall Street Journal also reported that China is balking at agreeing on a specific amount for planned agricultural purchases.

That was followed, however, by data from Germany showing that Europe's biggest economy avoid recession in the third quarter after posting modest GDP growth of 0.1% and revising its second quarter output to 0.2%, easing concerns that the U.S.-China trade conflict had paralyzed the heart of European industry. 

U.S. equity futures appear to have balanced the twin concerns heading into the start of trading Thursday, which includes weekly jobless claims data and October factory gate prices, with contracts tied to the Dow Jones Industrial Average indicating a 20 point decline. Those linked to the broader S&P 500 are guiding to a 2 point pullback while Nasdaq Composite futures are suggesting a 12 point slip for the tech-focused benchmark.

Walmart Inc. (WMT) - Get Report  shares were a notable early mover, rising 3% in pre-market trading after the world's biggest retailer posted stronger-than-expected third quarter earnings Thursday, and boosted its full-year profit guidance as e-commerce and grocery sales continue to surge.

European stocks, however, followed Asia lower in the opening minutes of trading despite the surprise German data, with auto stocks leading the declines after a surprise profit warning from luxury automaker Daimler AG. 

The Stoxx 600 benchmark was seen 0.1% lower in Frankfurt, while Britain's FTSE 100 slipped 0.5% in the opening minutes of trading in London as the pound held at 1.2834 against the U.S. dollar.

Overnight in Asia, China stocks managed to claw out modest gains despite a trio of data points indicating the world's second-largest economy's growth stalled in October, highlighted by a larger-than-expected slowdown in industrial production. 

The broader Asia ex-Japan index, however, slipped 0.35% while Japan's Nikkei 225 ended the session 0.76% lower at 23,141.55 points as investors worried that tariff disagreements might scupper a U.S.-China trade pact.

Away from equities, the U.S. dollar index was little-changed against a basket of its global peers at at 98.30 while benchmark 10-year Treasury note yields fell to 1.862% following Federal Reserve Chairman Jerome Powell's first day of Congressional testimony in Washington yesterday.

Global oil prices, however, jumped higher in overnight trading after data from the American Petroleum Institute showed a surprise decline in domestic crude stocks, offsetting Energy Department forecasts of record U.S. production rates this year and next as drillers continue to tap shale deposits in the Permian Basin.

Brent crude contracts for January delivery, the global benchmark, were seen 60 cents higher from their Wednesday close and trading at $62.97 per barrel, while WTI contracts for December were marked 50 cents higher at $57.62 per barrel.