Thursday May 30th

30-05-2019

Stock futures indicate small gains as yields rise, easing recession concerns

U.S. stock index futures were slightly higher Thursday morning as the rapid decline in bond yields stabilized, easing concerns about a recession. The protracted trade dispute between China and the U.S. still weighed on markets. A senior Chinese diplomat ramped up the rhetoric overnight. Also, China has halted soy purchases from the U.S., according to Bloomberg News. At around 8:15 a.m. ET, Dow Jones Industrial Average futures traded 24 points higher, indicating a gain of just 5 points at the open. Futures of S&P 500 and Nasdaq 100 also pointed to small gains. The 10-year yield added 3 basis points to 2.26% after hitting its lowest level since September 2017 on Wednesday. Plunging yields this month, along with a yield curve inversion, has raised concerns about slowing economic growth. On Wednesday, the Dow dropped more than 200 points as bond yields declined. Bank shares rose slightly along with yields. Bank of America and J.P. Morgan Chase traded 0.3% higher in the premarket. Citigroup rose 1.1% after an analyst at Goldman Sachs upgraded the bank to buy  from neutral. The analyst cited the potential for strong returns moving forward. Chinese Vice Foreign Minister Zhang Hanhui said Thursday that provoking trade disputes amounted to “naked economic terrorism. ” Washington and Beijing have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment. Investors are likely to closely monitor a flurry of economic data on Thursday. The U.S. economy grew by 3.1% to start the year, slightly better than expected and providing some relief at a time when recession fears are accelerating, the Commerce Department reported Thursday. First-quarter gross domestic product beat the 3% Dow Jones estimate but was lower than the initial 3.2% projection from the Bureau of Economic Analysis. The decrease came due to downward revisions to nonresidential fixed and private inventory investment, two key drivers to GDP. The number of people who applied for jobless benefits rose slightly in late May, but not enough to put a dent in the strongest U.S. labor market in decades. Initial jobless claims, a rough way to measure layoffs, rose by 3,000 to 215,000 in the seven days ended May 25, the government said Thursday. Economists polled by MarketWatch estimated new claims would total a seasonally adjusted 215,000. The more stable monthly average of new claims fell by 3,750 to 216,750. The four-week average gives a more accurate read into labor-market conditions than the more up-and-down weekly figure. Advance economic indicators and pending home sales for April are set for release slightly later in the session. Stocks in major Asia Pacific markets mostly slipped on Thursday as increasing tensions between the U.S. and China weighed on investor sentiment. The Nikkei 225 in Japan slipped 0.29% to close at 20,942.53. The Topix index also fell 0.29% to finish its trading day at 1,531.98. Mainland Chinese shares declined on the day, with the Shanghai compositeslipping 0.31% to 2,905.81 and the Shenzhen component shedding 0.74% to 8,943.35. The Shenzhen composite also fell 0.625% to close at 1,532.03. Over in Hong Kong, the Hang Seng index was lower by around 0.3%, as of its final hour of trading. South Korea’s Kospi bucked the overall trend as it rose 0.77% to close at 2,038.80. Oil prices fell on Thursday on fears of a global economic slowdown due to a U.S.-China trade war but losses were capped by a tightening crude market and rising political tensions in the Middle East. Brent crude futures, the international benchmark for oil prices, were at $68.86 per barrel at 6:44 a.m., down 59 cents, or 0.9%, from their last close. U.S. West Texas Intermediate (WTI) crude futures were up 12 cents, or 0.2%, at $58.93 a barrel, supported by expectations of a fall in U.S. crude inventories. Gold prices eased to a one-week low on Thursday as investors opted for dollars and U.S. government bonds as a hedge against trade tensions between the United States and China. Spot gold was down 0.2% at $1,276.72 per ounce by 0954 GMT, after falling to its lowest level since May 23 at $1,274.44. U.S. gold futures edged 0.4% lower to $1,281.40 an ounce.