The Thursday Market Minute
- Global stocks rally on U.S. stimulus hopes even as rising coronavirus infections suggest slowing growth in the months ahead.
- U.S. lawmakers signal the potential for compromise on a coronavirus relief bill, as well as support for the airline sector, as job losses loom.
- Japan’s TSE suffers technical failure that keeps the Nikkei 225 close for the first time since 1999.
- Weekly jobless claims at 8:30 am Eastern time follow a stronger-than-expected ADP employment report on Wednesday and non-farm payrolls on Friday.
- Oil prices drift lower as U.S. domestic crude stocks rise by 3.5 million barrels to the highest levels since May.
- U.S. equity futures suggest a firmer open on Wall Street to start the fourth quarter ahead of weekly jobless numbers and earnings from Pepsi and Constellation Brands.
U.S. equity futures jumped higher Thursday, while the dollar fell and oil prices slipped lower, as investors looked to hopeful signals on a new multi-trillion stimulus package from Washington following solid economic data that closed out the third quarter.
Markets were also boosted by a stronger-than-forecast reading of weekly jobs claims, which showed that 837,000 Americans filed for unemployment benefits last week, down from 873,000 in the prior period and just shy of the Street’s 850,000 forecast.
White House Chief of Staff Mark Meadows said late Wednesday that Republicans are ready to work with House Democrats on a compromise coronavirus relief package that could be worth more than $1.5 trillion and include around $20 billion in stand-alone support for the struggling airline industry.
The Republican tally would still fall shy of the $2.2 trillion bill the Democrats have agreed to, but ongoing talks between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin — as well as the prospect of tens of thousands of airline workers being furloughed later in the day — suggest that lawmakers might be ready to make one final push for an agreement before heading for their election break.
That said, yesterday’s stronger-than-expected ADP employment report, which showed 749,000 jobs added last month, as well as robust manufacturing and housing data, could give Congress some confidence to step-back from a pre-election agreement and wait until the new chamber is chosen in early November.
Markets certainly appear to be betting on near-term support, however, as futures contracts tied to the Dow Jones Industrial Average suggest a 210 point opening bell gain to start the final quarter of the year.
Futures tied to the S&P 500 — which gained 8.5% over the third quarter for its best six month gain since 2009 — are indicating a 27 point advance while the Nasdaq, which continues to ride its best six month gain in 20 years, is poised for a 145 point head start.
Investor optimism was also evident by a slide in the U.S. dollar, which of late has moved in the opposite direction of stock futures. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.1% lower at 93.81 while benchmark 10-year Treasury note yields rose to 0.69% in a bullish overnight session.
European stocks were also on the rise, even as investors grew increasingly rattled over the rise in coronavirus infections in the region’s three largest economies and a move by EU officials in Brussels to seek legal action against the United Kingdom for re-writing a bill in Parliament last month that violated their Brexit treaty arrangements.
The Stoxx 600 was marked 0.5% higher in early Frankfurt trading, although the trade-sensitive DAX index was only 0.02% into the green for the session, while Britain’s FTSE 100 jumped 0.2% higher in London.
Global oil prices slipped lower, as well, even as the dollar peeled away from multi-week highs in overnight trading, with traders citing yesterday’s Energy Department reading of domestic crude stocks, which rose by 3.5 million barrels to the highest levels since May, and a Reuters report suggesting OPEC output increased by 160,000 barrels per day from August levels.
WTI contracts for October delivery, the U.S. benchmark, traded 29 cents lower from their Wednesday close in New York to change hands at $39.93 per barrel while Brent contracts for November, the global benchmark, were seen 25 cents lower at $42.05 per barrel.
Overnight in Asia, China’s Mid-Autumn festival holiday kept markets in the world’s second-largest economy quiet, while a technical failure shut down trading for the day in Tokyo, keeping the lights off for the Nikkei 225 for the first time since 1999 and sapping liquidity in markets around the region.