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The Thursday Market Minute

  • U.S. equity futures suggest a positive open on Wall Street ahead of earnings from Starbucks and Intel after the close of trading and solid numbers from Bristol-Myers Squibb and American Airlines.
  • Global stocks stalled as investors remain defensive in the face of uncertain U.S.-China trade talks and further signals of a slowing world economy.
  • ECB makes no changes to its key policy rates, adding it will hold until at least through the summer of 2019.
  • Japan's manufacturing export orders fall to a two-and-a-half year low in January, while South Korean chipmaker SK Hynix echoes semiconductor concerns over slowing growth and swelling inventories.
  • Global crude trades lower as as investors pare bets on potential China stimulus to kick-start demand in the world's biggest energy importer and react to a surprise 6.6 million barrel build in domestic U.S. crude stocks.

Market Snapshot

U.S. equity futures edged higher Thursday, helped in part by stronger-than-expected semiconductor earnings, even as global investors remained defensive positions amid ongoing concerns over the strength of the world economy, the fate of U.S.-China trade talks and the potential for a change in tack from key central banks.

Contracts tied to the Dow Jones Industrial Average indicate a 28 point gain while those linked to the S&P 500 guiding to a 4.15 point bump high. Nasdaq Composite futures, however, suggest a stronger 30-point gain for the tech-focused benchmark thanks to a global rebound in chipmaking stocks following a series of better-than-expected earnings and outlooks last night from Texas Instruments (TXN) , Xilinx Inc. (XLNX) and Lam Reserach (LRCX) .

Earnings on tap for the Thursday session include Starbucks (SBUX)  and Intel (INTC)  after the bell as well as American Airlines (AAL) , Western Digital (WDC)  and Bristol-Myers Squibb (BMY)  .

American Airlines posted better-than-expected fourth quarter earnings Thursday and guided investors to a stronger performance in 2019 that it said would top its key competitors.

American said adjusted earnings for the three months ending in December came in at $1.04 per share, three cents ahead of the consensus forecast and up 11.8% from the same period last year. Group revenues were pegged at 10.938 billion on a non-GAAP basis, up around $300 million from the comparable quarter.

American Airlines shares were marked 5.5% higher at $33.40 each following the results, a move that would take the stock into positive territory over the past three months.

Bristol-Myers Squibb also posted stronger-than-expected fourth quarter earnings Thursday but pulled an application to the U.S. Food & Drug Administration for a blockbuster cancer drug combination in order to collect more data.

Bristol-Myers shares were marked 2.72% lower in pre-market trading following the results, indicating an opening bell price of $48.60 each, a move that would take the stock's three month decline to around 4.4%.

A lack of overnight headlines to drive those narratives in either direction kept markets at bay during Asia trade, and teed-up both European stocks and Wall Street for indecisive starts as focus shifts to the U.S. corporate earnings season and the economic impact of this prolonged government shutdown.

That said, data from Japan's powerful manufacturing export sector showed new orders falling to a two-and-a-half year low, while South Korea-based chipmaker SK Hynix Inc. echoed its major sector peers in cautioning on weak first quarter revenues, each confirming the impact of China's broader economic slowdown and the impact of its still-unresolved trade dispute with China.

President Donald Trump told reporters in Washington Wednesday that "I like where we are right now", in terms of trade talks, which are set to resume next week, adding that China "very much wants to make a deal. We'll see what happens. But we're doing very well in our negotiations with China."

European stocks added to gains Thursday, following a relatively tepid session in Asia, with the Stoxx 600 rising 0.35% and Britain's FTSE 100 slipping 0.06% as the pound held at an 11-week high of 1.3057 against the U.S. dollar.

The European Central Bank made no changes to its key policy rates following its regular meeting in Frankfurt, with investors now looking for any suggestion that a slowing European economy, which the International Monetary Fund flagged as a key global risk earlier this week, will lead to a change in tack from President Mario Draghi when he speaks with the media later this morning.

Draghi, who is set to retire after eight years at the helm in Frankfurt later this fall, has indicated that he and his colleagues on the Governing Council -- the equivalent to the Federal Reserve's Open Markets Committee -- would like to start 'normalizing' interest rates by late summer.

However, Draghi told lawmakers in the European Parliament in Strasbourg last week that "a significant amount of monetary policy stimulus is still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term," a view that was reflected in the International Monetary Fund's recent downgrade of the global economy.

The euro has fallen around 1.8% against the U.S. dollar since Draghi's comments in Strasbourg, as investors pare bets on the ECB's ambition to lift at least one of its interest rates later this year, with the decline accelerated by the weakest German economic growth in a least five years.

In Asia, the MSCI Asia ex-Japan index, the region's broadest measure of share prices, bumped 0.32% higher heading into the close of the session, while Japan's Nikkei 225 in closed 0.09% lower in Tokyo at 20,574.63 points.

Global oil prices, which have dictated the direction of U.S. markets for several weeks, drifted lower again Thursday thanks in part to the broader investor concern over end-demand for crude in a slowing global economy and data from the U.S. Energy Information Administration Wednesday which showed domestic stockpiles rose by a larger-than-expected 6.6 million barrels last week.

Brent crude contracts for March delivery, the global benchmark, were marked 64 cents lower from their Wednesday close in New York and changing hands at $60.50 per barrel while WTI contracts for the same month were 42 cents lower at $52.16 per barrel.