The major U.S. index futures are pointing to a higher opening on Thursday, with stocks likely to see further upside following the rebound seen over the course of the previous session.
The markets may benefit from easing concerns about a potential trade war between the U.S. and China, which have recently led to considerable volatility on Wall Street.
The U.S. and China have recently engaged in tit-for-tat tariff announcements, although traders seem optimistic that the threats are only a precursor to negotiations of a trade agreement between the two countries.
Nonetheless, overall trading activity may be somewhat subdued as traders look ahead to the release of the Labor Department’s more closely watched monthly jobs report on Friday.
Employment is expected to increase by 198,000 jobs in March after spiking by 313,000 jobs in February. The unemployment rate is expected to dip to 4.0 percent from 4.1 percent.
Stocks showed a substantial turnaround over the course of the trading session on Wednesday after moving sharply lower at the open. The major averages climbed well off their lows of the session and firmly into positive territory.
The major averages pulled back off their best levels going into the close but still ended the day sharply higher. The Dow jumped 230.94 points or 1 percent to 24,264.30, the Nasdaq soared 100.83 points or 1.5 percent to 7,042.11 and the S&P 500 surged up 30.24 points or 1.2 percent to 2,644.69.
The rebound on Wall Street came as traders shrugged off trade war concerns that initially weighed on the markets following news China issued a list of 106 U.S. products that will be subject to additional tariffs.
The Chinese Ministry of Commerce said it plans to impose a 25 percent tariff on $50 billion worth of U.S. exports, including aircraft, cars, and soybeans.
The announcement by China came shortly after the U.S. Trade Representative published a proposed list of products imported from China that could be subject to additional tariffs.
The publication of the list came after President Donald Trump announced last month that he planned to impose about $50 billion in tariffs on Chinese goods over intellectual-property violations.
The USTR said the sectors subject to the proposed tariffs include industries such as aerospace, information and communication technology, robotics, and machinery.
While critics have complained the administration’s policies risk starting a trade war, Trump argued in a post on Twitter that the war had already been lost.
“We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.,” Trump tweeted.
He added, “Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!”
On the U.S. economic front, payroll processor ADP released a report showing stronger than expected private sector job growth in the month of March.
ADP said employment surged up by 241,000 jobs in March after jumping by an upwardly revised 246,000 jobs in February. Economists had expected an increase of about 205,000 jobs.
A separate report from the Institute for Supply Management showed a modest slowdown in the pace of growth in the service sector in the month of March.
The ISM said its non-manufacturing index dipped to 58.8 in March from 59.5 in February, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to edge down to 59.0.
Housing stocks showed a substantial move to the upside over the course of the session, driving the Philadelphia Housing Sector Index up by 3.4 percent.
Lennar (LEN) led the housing sector higher after the homebuilder reported first quarter results that exceeded analyst estimates on both the top and bottom lines.
Significant strength also emerged among biotechnology stocks, as reflected by the 2.8 percent jump by the NYSE Arca Biotechnology Index. The index climbed further off the nearly three-month closing low set on Monday.
Tobacco, telecom, retail and healthcare stocks also moved notably higher as the day progressed, contributing to the turnaround by the broader markets.
Commodity, Currency Markets
Crude oil futures are slipping $0.18 to $63.19 a barrel after edged down $0.14 to $63.37 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,330.50, down $9.70 compared to the previous session’s close of $1,340.20. On Wednesday, gold rose $2.90.
On the currency front, the U.S. dollar is trading at 107.07 yen compared to the 106.78 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2252 compared to yesterday’s $1.2278.
Asian stocks moved mostly higher on Thursday as trade war fears eased and investors turned their focus to the U.S. jobs report due Friday for clues to job growth and future moves by the Federal Reserve. The markets in China were closed for Tomb-Sweeping Day.
Japanese stocks saw a relief rally as the yen weakened on improved risk appetite after the United States expressed willingness to negotiate a resolution to an escalating trade conflict with China.
The Nikkei 225 Index jumped 325.87 points or 1.5 percent to 21,645.42, while the broader Topix Index closed 1.1 percent higher at 1,724.61.
Sumitomo Realty & Development, Yamaha, Eisai, DeNA, Nippon Electric Glass, Nissan Chemical Industries and Mitsui Fudosan rose 3-4 percent.
Exporters Honda Motor, Sony and Canon gained 1-2 percent, and banks Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group added around 2 percent each.
Australian shares ended near day’s highs as trade war fears eased and investors bet on improved corporate earnings. The benchmark S&P/ASX 200 Index rose 27.40 points or 0.5 percent to 5,788.80, while the broader All Ordinaries Index ended up 24.30 points or 0.4 percent at 5,888.
The big four banks rose between 1 percent and 1.4 percent. Miners BHP Billiton, Fortescue Metals Group, Rio Tinto and South32 dropped 1-3 percent in light of further losses in Chinese steel and iron ore markets on Wednesday.
Utility AGL Energy lost 1.8 percent after the federal government said the company has a duty to shareholders to consider selling the Liddell coal-fired power station.
Australia posted a merchandise trade surplus of A$825 million in February, the Australian Bureau of Statistics said. That exceeded expectations for a surplus of A$725 million but was down from A$1.055 billion in January.
European stocks have moved sharply on Thursday, mirroring firm cues from Wall Street and Asia, as trade war worries abated somewhat and investors turned their focus to the U.S. jobs report due Friday.
While the German DAX Index has surged up by 2.3 percent, the French CAC 40 Index is up by 2 percent and the U.K.’s FTSE 100 Index is up by 1.7 percent.
Safe-have assets such as gold and the yen declined after recently appointed White House economic advisor Larry Kudlow said President Donald Trump’s strident approach could be a tactic to get China to negotiate on trade practice.
British advertising group WPP has climbed after settling a lawsuit brought by an employee that alleged racist and sexist behavior by a top executive at one of its premier agencies.
Sophos has also soared after the cybersecurity firm said billings for the year would come in at the top end of its guidance.
Similarly, Electrocomponents has jumped after saying its full-year adjusted pre-tax profit would be slightly ahead of previous expectations.
Dutch supermarkets and eCommerce company Ahold Delhaize N.V. has also risen after announcing the appointment of Frans Muller as its Chief Executive Officer, effective July 1.
French video games maker Ubisoft has moved sharply higher, buoyed by record global sales of its “Far Cry 5” game.
In economic news, German factory orders recovered in February, but the pace of expansion was much weaker than expected, figures from Destatis revealed.
A separate report from Eurostat showed Eurozone retail sales increased at a slower-than-expected pace in February after falling in the two previous months.
The U.K. service sector expanded at the weakest pace since July of 2016 in March due to bad weather, survey data from IHS Markit showed.
U.S. Economic Reports
With the release of the more closely watched monthly jobs report looming, the Labor Department released a report showing a bigger than expected increase in first-time claims for U.S. unemployment benefits in the week ended March 31st.
The report said initial jobless claims climbed to 242,000, an increase of 24,000 from the previous week’s revised level of 218,000.
A separate report released by the Commerce Department showed the U.S. trade deficit widened by more than anticipated in the month of February.
The Commerce Department said the trade deficit widened to $57.6 billion in February from a revised $56.7 billion in January.
Economists had expected the trade deficit to widen to $56.8 billion from the $56.6 billion originally reported for the previous month.
The wider than expected trade deficit in February was the widest since the $60.2 billion trade deficit recorded in October of 2008.
Economists had expected jobless claims to rise to 225,000 from the 215,000 originally reported for the previous week.
At 11 am ET, the Treasury Department is scheduled to announce the details of next week’s auctions of three-year and ten-year notes and thirty-year bonds.
Atlanta Federal Reserve President Raphael Bostic is due to speak at Financial Literacy Day 2018 in Sarasota, Florida, at 1 pm ET.
Stocks In Focus
Shares of Conn’s (CONN) are moving sharply lower in pre-market trading after the retailer reported better than expected fiscal fourth quarter earnings but weaker than expected revenues.
Seeds and agrochemicals company Monsanto (MON) may also see early weakness after reporting fiscal second quarter results that came in below analyst estimates.
On the other hand, shares of RPM International (RPM) may move to the upside after the specialty chemicals company reported fiscal third quarter results that exceeded expectations.
Food company J. M. Smucker (SJM) could attract attention after announcing an agreement to acquire pet food maker Ainsworth Pet Nutrition in a transaction valued at approximately $1.7 billion.
by RTTNews Staff Writer
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