The Thursday Market Minute
- Global stocks extend declines, with the MSCI World index falling to a one-month low, as trade uncertainty and manufacturing weakness highlight looming recession risks.
- U.S. moves quickly after WTO ruling on Airbus subsidies, slapping tariffs of between 10% and 25% on $7.5 billion worth of European-made goods.
- CME Group's FedWatch tool suggest a 75% chance of an October rate cut as investors look for more monetary support in a slowing U.S. economy.
- Oil prices slip slower as the dollar retreats on rate-cut bets and EIA data shows a surprise 3.1 million barrel buildup in domestic crude stocks.
- US equity futures suggest another weaker open on Wall Street ahead of weekly jobless claims data at 8:30 am Eastern time and a now-critical ISM services sector reading at 9:45 am Eastern time.
Market Snapshot
U.S. equity futures edged higher Thursday, following two-days of heavy declines on Wall Street linked to slowing growth and deepening trade uncertainty, as investors look for signs of life from the country's broader services sector later today, and the job market on Friday, amid the sharpest pullback in domestic stocks since late 2018.
The Institute for Supply Management will publish its reading of service sector activity for the month of September at 9:45 Eastern time, with investors keying off the data after the group's earlier assessment of factory activity fell to the lowest level since the global financial crisis and triggered two days of selling on Wall Street, including the first back-to-back 1%+ declines for the S&P 500 since December.
Much of the weakness in the September ISM manufacturing data was linked to the ongoing trade conflict between the U.S. and China, but investors are now growing concerned that this could expand to include Europe after the WTO ruled Wednesday that Washington could counter illegal subsidies to planemaker Airbus SE (EADSY) with tariffs on $7.5 billion worth of goods including airplanes made by Boeing's (BA - Get Report) main rival, French wine, British whiskey and Italian cheese.
With global stocks reeling from the sharp October sell-off on Wall Street, taking the broadest measure of world equities to the lowest levels in a month, U.S. equity futures suggest only modest gains as investors shun risk ahead of today's ISM reading and tomorrow's September payrolls report.
Contracts tied to the Dow Jones Industrial Average, which has fallen 3.11% over the past two sessions, suggest a 53.4 point advance at the opening bell while those linked to the S&P 500, which is off 2.99% for the month, are priced for a 5.6 point bump higher.
The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, traded near a one-week low of 99.08 as investors priced in a near 75% chance of a rate cut from the Federal Reserve when it meets later this month in Washington. Benchmark 10-year U.S. Treasury note yields, meanwhile, held at a multi-week low of 1.585%.
European stocks were also weaker at the start of trading, although volumes were thinner than usual owing to the closure of markets in German to celebrate National Unity Day.
Britain's FTSE 100, which tumbled 3.23% yesterday in its biggest single-day decline in nearly three years, slipped a further 0.32% as investors re-priced risk in basic resource and oil and gas stocks and shunned risk in the U.K. market amid the countries ongoing Brexit chaos.
Overnight in Asia, the heavy selling on Wall Street, as well as the U.S. move to quickly slap tariffs on European-made goods following the WTO ruling, flowed through to regional markets, boosting the yen and hammering the Nikkei 225, which fell more than 2% to close at a three-week low of 21,341.74 points.
Global oil markers were also weaker, with Brent crude sliding below levels seen prior to the September 14 attacks on the Abqaiq and Khurais oilfields in Saudi Arabia, following data from the U.S. Energy Department that indicated a bigger-than-expected 3.1 million increase in domestic crude stocks last week.
Brent crude contracts for December delivery, the global benchmark, were seen 14 cents lower from Wednesday's New York close to trade at $57.55 per barrel while WTI contracts for November delivery, which are more tightly linked with U.S. gasoline prices, were marked 5 cents lower at $52.59 per barrel.
https://www.thestreet.com/investing/stocks/dow-futures-extend-slide-trade-disputes-grown-concerns-unsettle-world-markets-15113346
2019-10-03 07:06:00Z
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