The Thursday Market Minute

  • U.S. equity futures point to modest declines Thursday ahead of quarterly earnings from Kraft Heinz and Hewlett Packard Enterprises after the closing bell
  • Asia shares touched four-and-a-half months highs on reports of detailed progress in U.S. China trade talks that could allow President Donald Trump to extend the March 2 deadline.
  • Sentiment got a further boost from Thursday's Fed Minutes, which reiterated the central bank's "patience" on policy but left the door open for late 2019 rate hikes.
  • Global oil test fresh 2019 highs as OPEC+ production cuts and a flat U.S. dollar offset a buildup in U.S. inventories and slowing global demand.
  • Nike shares slip nearly 2% after Duke basketball star Zion Williamson injured his knee when the Nike PG 2.5 shoe he was wearing ripped apart in the first minute of a nationally-televised game against arch-rivals at the University of North Carolina. 

Market Snapshot

Wall Street futures drifted lower Thursday, despite multiple reports of significant progress in U.S.-China trade talks and confirmation from the Federal Reserve that it will remain "patient" on future rate hikes, as weaker consumer sector earnings clipped pre-market sentiment.

Contracts tied to the S&P 500 I:GSPC  , which is sitting on a year-to-date gain of around 11%, indicated a 3 point slip while those linked to the Dow Jones Industrial Average I:DJI  are suggesting an 12.5 point pullback for the 30-stock index.

Dow component Nike Inc. (NKE) - Get Report shares were indicated 1.8% lower in pre-market trading Thursday after one of the most popular collegiate athletes in the United States, and a projected number one pick in next year's NBA draft, injured his knee after his Nike shoe collapsed during a nationally televised game last night in North Carolina.

Domino's Pizza (DPZ) - Get Report  slumped 6.5% after it posted weaker-than-expected fourth quarter earnings Thursday as comparable sales at its U.S.-owned stores disappointed investors while Wendy's WEN fell 3.2% after it earnings estimates by a penny but reported weaker same-store sales in the United States and a softer 2019 profit outlook.

Johnson & Johnson (JNJ) - Get Report shares were indicated 2.2% lower after it received subpoenas from the Department of Justice and the Securities and Exchange Commission in connection with the safety of its baby powder and talc products.

The modestly weaker open followed a solid overnight session for stocks in Asia, which tested fresh four-and-a-half month highs as negotiators from both the U.S. and China working this week in Washington were said to have drawn up several memorandums of understanding, covering issues ranging from agricultural purchases to intellectual property protection, that would define the nature of any broader agreement the two sides may reach over the coming weeks and months.

The agreements, while still at draft stage, would mark the most significant progress in the current round of negotiations, which began in early December, and could suggest that President Donald Trump is more likely to extend the March 1 deadline in order the allow the process to play out.

Investors were also buoyed by the release yesterday of Minutes from the Federal Reserve's January rate-setting meeting, which reiterated the central bank's aim to be more "patient" on future hikes while still leaving room to take lending rates higher later in the year.

"Many participants suggested that it was not yet clear what adjustments to the target range for the federal funds rate may be appropriate later this year," the Minutes read. "Several of these participants argued that rate increases might prove necessary only if inflation outcomes were higher than in their baseline outlook."

The Fed also indicated it would like to halt the reduction of its $4 trillion balance sheet, suggesting the so-called "roll off" -- where maturing bonds are not reinvested into the portfolio -- could end before the end of the year.

European stocks were modestly weaker by mid-day trading in Frankfurt, with the Stoxx 600 drifting 0.23% into the red as some of the region's blue-chip stocks delivered weaker-than-expected quarterly earnings.

Germany's DAX performance index, perhaps the most trade-sensitive benchmark in the European region, added 0.19% while Britain's FTSE 100 slipped 0.92% despite a solid .32% gain for Barclays plc (BCS) - Get Report after it reported weaker-than-expected 2018 earnings but said it would continue to grow its dividend payout.

The U.S dollar index, which tracks the greenback against a basket of six global currencies, slipped modestly lower in overnight trading after the Fed Minutes, which indicated both patience on rates and the potential for a late 2019 rate-hike. Benchmark 10-year Treasury bond yields were marked at 2.659% while 2-year notes were seen at 2.51%.

Global oil prices traded around the highest levels of 2019 in early European hours, taking the year-to-date gain for Brent crude close to 25%, as investors continued to watch the collective momentum of OPEC+ production cuts offset record U.S. output, White House sanctions on Iran and Venezuela and a buildup in domestic oil inventories.

Brent crude contracts for April delivery, the global benchmark, were marked 6 cents lower from their Wednesday close in New York and changing hands at $67.02 while WTI contracts for the same month were seen 10 cents higher at $57.26 per barrel.