The Thursday Market Minute
- Global stocks extend gains as Federal Reserve signals 'patience' on future rate hikes and U.S. earnings blast forecasts despite ongoing concern over the pace of growth in China.
- Asia stocks hit a four month high as risk appetite returns in the wake of the Fed's dovish tilt, with the U.S. dollar falling to a three week low against a basket of its global peers.
- European stocks book modest gains despite the bullish tone as a host of blue-chip earnings around the region keep benchmarks in check and the euro rises firmly against a weaker greenback.
- Global oil prices are back on the march, taking gains to nearly 30% since the Christmas Eve trough, as Saudi exports to the U.S. stock and domestic stockpiles continue to swell.
- U.S. equity futures suggest modest gains for Wall Street ahead of the busiest day of the earnings seasons with 37 companies set to report including Amazon, General Electric, Mastercard and ConcoPhillips.
Global stocks extended gains Thursday, with markets in Asia rising to the highest level in four months, after the U.S. Federal Reserve signaled a pause in its rate hike plans and a series of blue-chip companies posted stronger-than-expected earnings and profit guidance that eased concerns over the prospect of a damaging slowdown in China.
Fed Chairman Jerome Powell that weakening global growth, alongside the lack of inflationary pressures in the United States, meant the central bank was able to "be patient" in its assessment of the need for further policy tightening, while he and his colleagues on the Open Markets Committee ditched a reference to "further gradual hikes" later this year in the official statement published Wednesday.
"We are now facing a somewhat contradictory picture of generally strong U.S. macroeconomic performance alongside growing evidence of cross-currents," Powell told reporters in Washington. "Common sense risk management suggests patiently waiting greater clarity."
The dovish tilt, which marks a significant change to the bank's stance it stressed only six weeks ago, was paired with a series of stronger-than-expected U.S. earnings both before and after the close of trading yesterday that suggested companies were either weathering the impact of a China-led slowdown in global growth or insulated enough that investors were focused on their company-specific challenges.
The collective bullishness lifted the Dow Jones Industrial Average
Overnight in Asia, the ripple effect of the Fed's new "wait and see" stance sent the dollar index, which tracks the greenback against a basket of six global currencies, to a three-week low of 95.26 and helped lift regional stocks to the highest levels in four months, with the MSCI ex-Japan index rising 0.75% and the Nikkei 225 riding a weaker yen to a 1.06% gain by the close of trading in Tokyo.
Early indications from U.S. equity futures suggest the gains may not extend into a second session on Wall Street, however, although with 37 companies posting earnings today -- the busiest of the fourth quarter season -- alongside key inflation data and weekly jobless claims, markets aren't likely to find direction until nearer the opening bell.
Celgene (CELG) , Amazon (AMZN) , DuPont (DWDP) , ConocoPhillips (COP) , General Electric (GE) , Mastercard (MA) , Northrop Grumman (NOC) , Raytheon (TRN) and UPS (UPS) are all set to update investors throughout the session.
Facebook (FB) shares are likely to be active today as well, after the social media giant posted much stronger-than-expected quarter earnings and said it continued to add users and advertisers despite a tidal wave of negative headlines and privacy concerns that have washed over the group over the past year.
European stocks were modestly higher at the start of trading in Frankfurt, with the Stoxx 600 benchmark rising 0.15% as benchmarks around the region grappled with a series of top-tier corporate earnings in the busiest reporting day of the year. Britain's FTSE 100 lead gainers with a 0.5% gain as basic resource stocks topped the index following record annual profits from Royal Dutch Shell plc (RDS.A) of $21.4 billion which pushed shares 2.6% higher in the opening minutes of trading in London.
Facebook shares were marked 11.15% higher in after-hours trading in New York late Wednesday, indicating an opening bell price of $167.15 each, the highest since late September.
Global oil prices were back on the march again Thursday, taking U.S. crude nearly 30% higher from its Christmas Eve nadir, after the U.S. Energy Information Administration said domestic stockpiles grew by nearly 1 million barrels last week, and are 6.6% higher from last year, while imports of Saudi crude slowed to the second lowest weekly level since records began in 2010.
Brent crude contracts for March delivery, the global benchmark, were marked 37 cents higher from their Tuesday close in New York and changing hands at $62.02 per barrel while WTI contracts for the same month were seen 7 cents lower at $54.16 per barrel.