Easing Geopolitical Concerns May Lead To Strength On Wall Street

Easing Geopolitical Concerns May Lead To Strength On Wall Street

The major U.S. index futures are pointing to a higher opening on Thursday, with stocks likely to move back to the upside following the weakness seen in the previous session.

The upward momentum on Wall Street comes as President Donald Trump sought to downplay concerns about an attack on Syria.

“Never said when an attack on Syria would take place. Could be very soon or not so soon at all!” Trump said in a post on Twitter.

He added, “In any event, the United States, under my Administration, has done a great job of ridding the region of ISIS. Where is our ‘Thank you America?'”

Following the rally seen in the previous session, stocks moved back to the downside during trading on Wednesday.

The Dow slid 218.55 points or 0.9 percent to 24,189.45, the Nasdaq dipped 25.27 points or 0.4 percent to 7,069.03 and the S&P 500 fell 14.68 points or 0.6 percent to 2,642.19.

The weakness on Wall Street came amid geopolitical concerns after President Donald Trump warned Russia “get ready” for missiles being launched at Syria.

On the U.S. economic front, the Labor Department released a report showing a modest decrease in consumer prices in the month of March.

The Labor Department said the consumer price index dipped by 0.1 percent in March after rising by 0.2 percent in February. Economists had expected consumer prices to come in unchanged.

Excluding food and energy prices, core consumer price index rose by 0.2 percent March, matching the increase seen in the previous month. The uptick in core prices matched economist estimates.

Later in the day, the Federal Reserve released the minutes of its latest monetary policy meeting, which showed members of the central bank discussed the need to slow down the economy.

Some member said that “monetary policy eventually would likely gradually move from an accommodative stance to being a neutral or restraining factor for economic activity,” the minutes said.

At the March meeting, the Fed raised its benchmark federal-funds rate by a quarter percentage point to between 1.5% and 1.75%.

Commodity, Currency Markets

Crude oil futures are falling $0.33 to $66.49 a barrel after jumping $1.31 to $66.82 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,347.50, down $12.50 compared to the previous session’s close of $1,360. On Wednesday, gold jumped $14.10.

On the currency front, the U.S. dollar is trading at 107.18 yen compared to the 106.79 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2326 compared to yesterday’s $1.2367.

Asia

Asian stocks closed broadly lower on Thursday as concerns over possible U.S. military action in Syria and hawkish statements from the Federal Reserve dented investors’ risk appetite.

Traders also awaited cues from the U.S. earnings season, which kicks off with a bang on Friday as some of the largest banks and financial services companies report their quarterly results.

China’s Shanghai Composite Index fell 27.88 points or 0.9 percent to 3,180.20 amid rising Middle East tensions, while Hong Kong’s Hang Seng Index dipped 66.43 points or 0.2 percent to 30,831.28.

Chinese foreign direct investment increased slightly in March, the Ministry of Commerce said. Foreign direct investment into China rose 0.4 percent year-on-year to CNY 88.14 billion in March. In the first quarter, FDI climbed 0.5 percent.

Japanese shares fell slightly as the dollar sagged against the yen on concerns about possible U.S. military action against Syria. The Nikkei 225 Index edged down 26.82 points or 0.1 percent to 21,660.28, while the broader Topix Index closed 0.4 percent lower at 1,718.52.

Convenience store operator Lawson fell almost 5 percent after the company said its fiscal year operating profit for year ending February 2019 will likely fall by 8.8 percent. On the positive side, Aeon jumped 4 percent after reporting a 14 percent rise in annual profit.

Japan Petroleum jumped 3 percent after oil prices hit their highest level in more than three years overnight. Japan’s Fast Retailing rallied 2.1 percent. The Uniqlo owner raised its annual profit forecast after reporting a 35 percent increase in its second quarter operating profit.

Household goods retailer Ryohin Keikaku soared 5.2 percent. The company said it expects an 11 percent rise in its net profit for the year through February 2019.

Australian shares closed modestly lower after Trump warned of imminent U.S. military action in Syria. The benchmark S&P/ASX 200 Index dropped 13.20 points or 0.2 percent to 5,815.50, and the broader All Ordinaries Index ended down 14.40 points or 0.2 percent at 5,911.40.

The big four banks fell between 0.3 percent and 0.8 percent, while miners BHP Billiton and Rio Tinto rose 0.7 percent and 0.3 percent, respectively.

Energy stocks also closed broadly higher after oil prices hit their highest level since late-2014 on Wednesday. Oil Search, Origin Energy and Beach Energy rallied 1-2 percent.

Europe

European stocks are subdued on Thursday as escalating tensions surrounding Syria as well as disappointing economic reports offset investor excitement over a fresh round of corporate deal making.

While the U.K.’s FTSE 100 Index is just above the unchanged line, the French CAC 40 Index is up by 0.3 percent and the German DAX Index is up by 0.6 percent.

French grocery retailer Carrefour Group has slumped after reporting weak first-quarter sales. Airbus Group has also dropped after the aerospace and defense major said it anticipates adjusted EBIT to grow about 20 percent in 2018.

Germany’s GEA Group has fallen after the system provider for the food processing industry said it expects its first quarter EBITDA to be approximately 65 million euros, lower than previous year’s 96 million euros.

Meanwhile, German automaker Volkswagen has rallied on a Nikkei report that it is discussing a comprehensive tie-up with Japanese truck manufacturer Hino Motors in the commercial vehicle business.

Shire Plc shares have also advanced in London amid reports that Takeda Pharmaceutical is moving closer to making a bid for the company.

British rail and bus operator FirstGroup has soared after rejecting a takeover offer from U.S. private equity firm Apollo Management.

On the economic front, Eurozone industrial production decreased for the third straight month in February, Eurostat reported today.

Industrial output fell 0.8 percent month-on-month, following a 0.6 percent drop in January. This was the third consecutive drop and came in contrast to the expected growth of 0.1 percent.

U.K. economic growth remained subdued in the first quarter despite a strong export performance, according to the latest Quarterly Economic Survey from the British Chambers of Commerce.

In the service sector, the balance of firms reporting improved export sales rose slightly to +13 from +12 and orders to +10 from +7. Domestic sales held steady at +20, while domestic orders rose to +16 from +14.

A gauge of U.K. house price balance remained at zero in March, while French consumer price inflation accelerated more than initially estimated in the month, separate reports showed.

U.S. Economic Reports

The Labor Department released a report showing first time claims for unemployment benefits decreased in the week ended April 7th.

The report said initial jobless claims fell to 233,000, a decrease of 9,000 from the previous week’s unrevised level of 242,000. Economists had expected jobless claims to drop to 230,000.

A separate report released by the Labor Department showed import prices came in unchanged in March, while export prices increased by more than expected.

The Labor Department said import prices recorded no change in March after climbing by 0.3 percent in February. Economists had expected import prices to rise by 0.2 percent.

Meanwhile, the report said export prices increased by 0.3 percent in March after rising by 0.2 percent in the previous month. Export prices had been expected to rise by 0.2 percent.

At 1 pm ET, the Treasury Department is scheduled to announce the results of its auction of $13 billion worth of thirty-year bonds.

Minneapolis Federal Reserve President Neel Kashkari is due to participate in a moderated Q&A with Tim Worke, CEO of Associated General Contractors of Minnesota, in Minneapolis at 5 pm ET.

by RTTNews Staff Writer

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