The Wednesday Market Minute

  • Global stocks steady, with modest declines in Asia offset by gains for European benchmarks, as investors attempt to restore order on the final trading day of the week.
  • Oil prices rebound following a Tuesday sell-off which push U.S. crude prices to the lowest level in more than a year as the dollar drifts and private data shows a drawdown in domestic stockpiles.
  • Italy hints at a softer stance on spending as the budget standoff with Brussels continues, easing pressure on government bond yields and adding to the region's firmer sentiment.
  • U.S. equity futures suggest a 100 point gain for the Dow after it slips into negative territory for the year last night ahead of earnings from Hewlett Packard and Deere & Co. 

Market Snapshot

Global stocks steadied Wednesday, as investors attempted to restore order to markets in the final full day of trading in a Thanksgiving-shortened week following last night's energy and tech-lead slump on Wall Street that raises significant questions for the direction of the global economy heading into next year.

Last night's sell-off on Wall Street, which pushed the Nasdaq Composite Index past a a seven-month low and tipped both the Dow Jones Industrial Average and the S&P 500 into negative territory for the year, also marked the collective loss of more than $1 trillion for the so-called FANG stocks -- Faecbook (FB) , Apple (AAPL) , Amazon (AMZN) , Netflix (NFLX) and Google (GOOGL) -- as each slid into bear market territory amid a wholesale repricing of risk and consumer demand.

The tech losses were matched by a huge slump for global oil prices, which saw WTI crude futures fall to the lowest level in more than a year, as investors took signs of a global economic slowdown, alongside consistently-increases levels of U.S. production, to lop more than 6% from oil prices by the close of trading.

Curiously, however, neither dynamic has flowed through into Asian or European trading, and while Japan's Nikkei 225 and the broader MSCI ex-Japan index were both marked lower, stocks in Frankfurt and London posted modest gains, suggesting yesterday's volatility hasn't yet translated into a broader global sell-off, or that investors are hoping to solidify positions ahead of tomorrow's U.S. Thanksgiving holiday and Black Friday shopping that typically saps global market liquidity.

U.S. equity futures, as well, are showing some early market resilience, with contracts tied to the Dow indicating a 155-point gain for the 30-stock average, a move that would pull back about a fifth of yesterday's 2.2% decline. Futures tied to the S&P 500 are also looking stronger, and suggest a 20 point gain for the broader benchmark, while those linked to the tech-focused Nasdaq  indicate a solid 80-point gain at the start of trading in New York.

Foot Locker Inc. (FL) shares surged in pre-market trading Wednesday after the athletic apparel retailer posted stronger-than-expected third quarter earnings after the closing bell Tuesday that defied the sector's disappointing session ahead of this season's Black Friday shopping event.

Foot Locker shares were marked 15.32% higher in pre-market trading Wednesday, indicating an opening bell price of $53.15 each, the highest since late June and a move would swing the stock into positive territory for the year and value the New York, N.Y.-based retailer at just over $6.1 billion.

Deere & Co. (DE) posted weaker-than-expected earnings for its fiscal fourth quarter Wednesday and indicated that global sales growth would slow next year amid trade and geopolitical tensions.

Deere & Co. shares were marked 4.7% lower in pre-market trading, indicating an opening bell price of $132,00 each, a move that would extend the stock's year-to-date decline past 16% and value the Moline, Ill.-based industrial group at just under $44 billion.

That said, the twin concerns that are driving the current bearish sentiment -- faster rate hikes from the U.S. Federal Reserve and escalating trade tensions between Washington and Beijing -- haven't changed in any meaningful way over the course of the week, suggesting investors will need to adjust to higher levels of headline volatility as we head into December.

The CME Group's FedWatch tool, which assigns probabilities to future rate hikes, suggests a 72% chance of a December hike, a figure that has held steady throughout this week's market turmoil, which benchmark 10-year U.S. Treasury bond yields have traded within a range of 3.05% to 3.07% for most of the past three days.

Europe's two major risk events, as well, are also simmering under the surface, with U.K. Prime Minister Theresa May heading to a weekend summit during which she will try and sell her patchwork Brexit plan to EU leaders and Italy's budget standoff with Brussels possibly heading towards penalties for Rome for breaching the bloc's rules on excessive deficits.

Away from equities, the firmer equity market sentiment has trimmed some of the recent gains for the U.S. dollar, with the dollar index slipping 0.17% to 96.67 in early European trading.

Oil's Wednesday rebound was also linked to the weaker greenback, but was also down to investors snapping up cheap crude contracts after yesterday's wipeout and data from the American Petroleum Institute that showed domestic stockpiles fell by 1.5 million barrels last week.

Brent crude contracts for January delivery, the global benchmark, were seen $1.08 higher from their Tuesday close in New York and changing hands at $63.57 per barrel while WTI contracts for December, which are more tightly liked to U.S gas prices, were marked 92 cents higher at $54.35 per barrel.