The major U.S. index futures are pointing to a roughly flat opening on Thursday, as traders may be reluctant to make significant moves as they digest the European Central Bank’s monetary policy announcement.
The ECB kept all three of its interest rates unchanged and said it expects rates to remain at their current levels for an extended period of time.
The central bank also confirmed that its net asset purchases are intended to run at the current monthly pace of 60 billion euros until the end of December 2017, or beyond, if necessary.
With the statement unchanged, traders are keeping an eye on ECB President Mario Draghi’s press conference for any hint on the future of the bank’s massive stimulus.
Stocks moved mostly higher over the course of the trading day on Wednesday following the sell-off seen in the previous session. The tech-heavy Nasdaq fluctuated as the day progressed but managed to close moderately higher.
The major averages ended the day in positive territory but off their highs of the session. The Dow climbed 54.33 points or 0.3 percent to 21,807.64, the Nasdaq rose by 17.74 points or 0.3 percent to 6,393.31 and the S&P 500 advanced 7.69 points or 0.3 percent to 2,465.54.
The rebound on Wall Street came following news President Donald Trump agreed to support a measure that would raise the debt ceiling and fund the government for three months.
The short-term debt limit and government funding measure would be attached to a bill providing aid for victims of Hurricane Harvey.
House Minority Leader Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., released a statement announcing the agreement on the combined bill after meeting with Trump.
The statement by Pelosi and Schumer came even though House Speaker Paul Ryan, R-Wis., attacked the idea of a short-term debt limit increase just hours earlier.
Speaking to reporters, Ryan described a Democratic plan to combine a Hurricane Harvey aid package with a short-term debt limit increase as “ridiculous and disgraceful” as well as “unworkable.”
Trump confirmed the agreement in remarks to reporters aboard Air Force One as he traveled to North Dakota for a tax reform event.
On the U.S. economic front, the Institute for Supply Management released a report showing a rebound in the pace of growth in service sector activity in the month of August.
The ISM said its non-manufacturing index climbed to 55.3 in August after falling to 53.9 in July, with a reading above 50 indicating growth in the service sector. Economists had expected the index to rebound to 55.8.
A separate report released by the Commerce Department showed the trade deficit came in slightly wider in the month of July.
The Commerce Department said the trade deficit widened to $43.7 billion in July from a revised $43.5 billion in June. Economists had expected the deficit to widen to $44.6 billion.
Meanwhile, the Federal Reserve released its Beige Book, which said economic activity expanded at a modest to moderate pace across all twelve districts in July and August.
Computer hardware stocks saw considerable strength on the day, resulting in a 1.8 percent jump by the NYSE Arca Computer Hardware Index. With the gain, the index reached its best closing level in a month.
Electronics for Imaging (EFII) posted a standout gain after the digital imaging company said it does not currently expect an accounting review to require a restatement of previously reported financial results.
Significant strength was also visible among energy stocks, which moved higher along with the price of crude oil. Reflecting the strength in the energy sector, the Philadelphia Oil Service Index advanced by 1.7 percent, while the NYSE Arca Oil & Gas Index and the NYSE Arca Natural Gas Index both climbed by 1.5 percent.
Railroad, retail, and airline stocks also saw notable strength on the day, while gold stocks moved lower along with the price of the precious metal.
Commodity, Currency Markets
Crude oil futures are falling $0.34 to $48.82 a barrel after climbing $0.50 to $49.16 a barrel on Wednesday. An ounce of gold is trading at $1,347.10, up $8.10 compared to the previous session’s close of $1,339. On Wednesday, gold slid $5.50.
On the currency front, the U.S. dollar is trading at 108.78 yen compared to the 109.22 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2039 compared to yesterday’s $1.1917.
Asian stocks fluctuated before closing mixed on Thursday despite overnight gains in the U.S. markets. While the agreement on a temporary extension of the U.S. debt ceiling to December helped spur gains earlier in the session, markets succumbed to selling pressure at higher levels as the day progressed.
Chinese shares fell notably as banking and resource shares succumbed to profit taking after recent sharp gains. The benchmark Shanghai Composite Index shed 18.96 points or 0.6 percent to finish at 3,366.43, while Hong Kong’s Hang Seng Index fell 90.84 points or 0.3 percent to 27,522.92.
Meanwhile, Japanese shares rebounded from four-month intraday lows hit the previous day after the yen sold off overnight. The Nikkei 225 Index rose 38.55 points or 0.2 percent to 19,396.52, and the broader Topix Index closed 0.4 percent higher at 1,598.24.
Automakers and construction companies led the gainers. McDonald’s Holdings Company Japan gained 1.6 percent after the company reported an increase in August same-store sales.
Australian shares gave up early gains to end roughly flat after the release of weaker than expected retail and trade data. While retail sales came in flat during July in seasonally adjusted terms, the trade balance figures came in well below market expectations.
Banks ended narrowly mixed, while mining heavyweight BHP Billiton dropped 1.4 percent on going ex-dividend. Rival Rio Tinto advanced 0.7 percent after announcing a 50 percent increase in reserves at one of its coal mines in central Queensland.
Sigma Healthcare rallied nearly 3 percent after the pharmacies and drug supplier lifted its half-year profit by 17 percent and said the outlook for fiscal 2019 is more positive.
Oil Search gained over 1 percent and Woodside Petroleum added 0.7 percent after oil prices rose about 1 percent overnight.
European stocks have moved to the upside on the day as traders react to the ECB’s monetary policy announcement. While the German DAX Index has advanced by 0.9 percent, the French CAC 40 Index is up by 0.6 percent and the U.K.’s FTSE 100 Index is up by 0.4 percent,
Earlier in the day, Sweden’s central bank kept its benchmark interest rate and asset purchase program unchanged, as expected, and reiterated it would not raise rates until the middle of 2018.
Automakers have extended Wednesday’s rally after Barclays and Goldman Sachs upgraded their ratings on the sector.
Bovis Homes shares have soared in London. The troubled homebuilder posted weak half-year results but said it would raise its dividend this year and next, reflecting its confidence in the outlook for the business under new chief executive Greg Fitzgerald.
Tobacco company Imperial Brands has also rallied after trimming its stake in Spanish logistics company Logista.
Meanwhile, British outsourcer Capita has tumbled after restating its 2016 accounts due to accounting changes.
In economic news, German industrial output showed no growth in July following a 1.1 percent decrease in June, data from Destatis showed.
Data from the French customs office showed the French trade deficit widened to 5.97 billion euros in July from 4.88 billion euros in June as imports grew faster than exports.
Eurostat reported that the euro area economy expanded 0.6 percent sequentially in the second quarter, faster than the 0.5 percent expansion seen in the first quarter. The growth came in line with the estimate released on August 16th.
U.K. house prices advanced 2.6 percent year-on-year in the three months to August, faster than the 2.1 percent increase seen in three months to July, data from mortgage lender Halifax and IHS Markit revealed.
U.S. Economic Reports
The Labor Department released a report showing a sharp increase in first-time claims for unemployment benefits in the week ended September 2nd.
The report said initial jobless claims jumped to 298,000, an increase of 62,000 from the previous week’s unrevised level of 236,000. Economists had expected jobless claims to rise to 241,000.
A separate report from the Labor Department showed labor productivity increased by more than initially estimated in the second quarter, while unit labor costs rose by less than initially estimated.
The Labor Department said labor productivity climbed by 1.5 percent in the second quarter compared to the previously reported 0.9 percent increase. Economists had expected the pace of productivity growth to be upwardly revised to 1.3 percent.
Meanwhile, the report said unit labor costs rose by 0.2 percent during the quarter compared to the previously reported 0.6 percent growth. Unit labor costs had been expected to rise by a revised 0.3 percent.
At 11 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended September 1st.
Crude oil inventories are expected to climb by 4.7 million barrels after slumping by 5.4 million barrels in the previous week.
The Treasury Department is also due to announce the details of next week’s auctions of three-year and ten-year notes and thirty-year bonds at 11 am ET.
At 12:15 pm ET, Cleveland Federal Reserve President Loretta Mester is scheduled to speak about the economic outlook and monetary policy at an event in Pittsburgh, Pennsylvania.
New York Fed President William Dudley is due to speak about the U.S. economic outlook and implications for monetary policy at a Money Marketeers of New York University event in New York at 5:30 pm ET.
At 7 pm ET, Atlanta Federal Reserve President Raphael Bostic is scheduled to participate in a moderated discussion on his views on the economy in Atlanta, Georgia.
Kansas City Fed President Esther George is due to discuss the U.S. economic outlook at the Omaha Economic Forum in Omaha, Nebraska, at 8:15 pm ET.
Stocks In Focus
Shares of Restoration Hardware (RH) are spiking higher in pre-market trading after the upscale furniture retailer reported better than expected second quarter results and raised its full-year guidance.
High definition camera maker GoPro (GPRO) is also likely to see early strength after saying it expects the third quarter to be profitable on a non-GAAP basis.
Shares of FireEye (FEYE) may also move to the upside after Morgan Stanley upgraded its rating on the cybersecurity company’s stock to Overweight from Equal-Weight.
On the other hand, shares of Alnylam Pharmaceuticals (ALNY) may come under pressure after the drug developer suspended dosing in studies of its experimental drug for a rare bleeding disorder after a patient’s death.
Building products supplier Builders FirstSource (BLDR) is also seeing pre-market weakness after pricing an offering 13,482,177 shares of its common stock at $16.30 per share.
Shares of Celgene (CELG) may also move to the downside after the biopharmaceutical company said the FDA has placed a partial clinical hold on five trials and a full clinical hold on one trial in the Celgene FUSION program.
by RTT Staff Writer
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