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The Friday Market Minute

  • Global stocks drift higher despite persistent trade and growth concerns as U.S. fundamentals support cautious optimism.
  • European markets get boost from weaker euro, which tested 52-week lows yesterday after European Central Bank President Mario Draghi cautioned that regional economic risks had shifted to the downside.
  • Global oil markets trade higher as investors react to the prospect of sanctions on the sale of Venezuelan crude amid that nation's simmering political crisis.
  • U.S. equity futures point to modest gains ahead of a light corporate earnings calendar and key data on housing and manufacturing for the months of November and December respectively.

Market Snapshot

Global stocks drifted higher again Friday, even as investors continue to worry about a lack of progress in U.S. China trade talks and digest further evidence of weakening economic growth, as earnings from the tech sector continue to impress and central banks signal deepening support amid the slowdown.

European Central Bank President Mario Draghi added to the chorus of growth concerns yesterday when he told reporters that risks to the region's economic prospects "have moved to the downside", citing a "persistence of uncertainties" linked to trade and geo-politics. "The near-term growth momentum is likely to be weaker than previously expected," he added in comments that pushed the euro to a near 52-week low against the U.S. dollar and ignited speculation that the Bank would either need to add further monetary stimulus or extend its current projection for rate hikes well into next year. 

Draghi's remarks were matched by scepticism from U.S. Commerce Secretary Wilbur Ross, who told CNBC that Washington and Beijing were "miles and miles" apart on key issues in trade negotiations, which resume next week in the capital, but still felt a deal between the world's two biggest economies was possible.

Despite that pessimism, Asia stocks noted solid Friday gains, with the region-wide MSCI ex-Japan benchmark rising 1.17% and the Nikkei 225 in Tokyo gaining 0.97% to close at 20,773.56 points.

U.S. equity futures were also in the green, but pointed to more modest gains ahead of a light corporate earnings calendar -- which includes Colgate-Palmolive CL and DR Horton DHI -- as well as key housing and manufacturing data for the months of November and December respectively.

Contracts tied to the Dow Jones Industrial Average are indicating a 104-point gain for the 30 stock average, which has fallen around 0.70% so far this week, and an 11.3 point bump higher for the S&P 500 , which have given back 1.06%. 

Intel Inc. (INTC) shares were indicated sharply lower after the chipmaker disappointed investors with weak fourth quarter revenues and a tepid profit outlook it said was linked to slowing demand in China.

Intel shares were marked 5.9% lower in pre-market trading, indicating an opening bell price of $46.82 each, a move that would trim the stock's three month gain to around 10.3%.

Starbucks Inc. (SBUX) shares were indicated 3.65% higher after the world's largest coffee chain posted stronger-than-expected first quarter earnings and raised it full year profit forecast as domestic stores saw a holiday sales revival.

Starbucks said non-GAAP earnings for the three months ending in December, the company's fiscal first quarter, came in a 75 cents a share, topping the consensus forecast by 10 cents and rising 15.4% from the same period last year. Global revenues rose 9.2% to $6.63 billion, Starbucks said, again topping the consensus forecast, thanks in part to a record $4.6 billion in north American sales.

Colgate-Palmolive (CL)  shares fell 2.25% after it posted weaker-than-expected fourth quarter earnings Friday and expects a low single-digit decline in 2019 profits thanks to rising input costs and a stronger U.S. dollar.

Colgate-Palmolive said earnings for the three months ending in December came in at 70 cents a share, down 6.66% from the same period last year and 3 cents shy of the consensus forecast. Group sales, the company said, were pegged at 3.811 billion, essentially flat from the fourth quarter of 2017 but modestly ahead of the Street forecast.

Colgate-Palmolive said it sees a "low single-digit" decline in 2019 earnings, while net sales are likely to be flat or modestly higher than the previous year's tally.

European stocks were also stronger by mid-day of trading Friday, buoyed by the softer euro, which was marked at 1.1332 against the U.S. dollar. The region-wide Stoxx 600 index jumped 0.72% in Frankfurt, helped by a 1.33% gain for the DAX performance index, while Britain's FTSE 100 was marked 0.34% as the pound held at multi-month highs of 1.3088.

Global oil prices were marked higher in early European trading as investors reacted to the prospect of sanctions on the sale of Venezuelan crude amid that nation's ongoing political crisis, but reversed those gains amid weakening fundamentals for both end demand and U.S. supply.

The prospect offset data from the U.S. Energy department yesterday which showed domestic gasoline stockpiles hit a record 259.6 million barrels in the week ending January 18, while crude inventories rose by a bigger-than-expected 8 million barrels.

Brent crude contracts for March delivery, the global benchmark, were marked 220 cents lower from their Thursday close in New York and changing hands at $60.89 per barrel while WTI contracts for the same month were 3 cents lower at $53.10 per barrel.