Thursday August 27th

27-08-2015

Dow futures add 200 points after GDP data

U.S. stock index futures pointed to a sharply higher open Thursday, with the Dow indicating gains more than 200 points following a solid GDP report and after the stellar close seen on Wednesday. The second estimate of second-quarter GDP came in at 3.7 percent, topping the first read of an annualized 2.3 percent. Weekly jobless claims came in slightly lower than expected at 271,000, marking the first decline in five weeks and indicating continued improvement in the labor market. Investors will also eye a key meeting of central bankers at Jackson Hole, Wyoming. The annual Economic Policy Symposium starts on Thursday and brings together academics, financial market participants and many of the world's leading central bankers. The event will be scrutinized for signals on near-term monetary policy action in the U.S., although many monetary policymakers are seen opting out, including U.S. Federal Chair Janet Yellen and Daniel Tarullo, a member of the Fed's Board of Governors. Federal Reserve Bank of Kansas City President Esther George said in a CNBC interview from Jackson Hole that the central bank should normalize interest rates, a view the non-voting Fed member has consistently held. She added it's important for the Fed to understand the extreme volatility in stock markets this week, but cautioned that markets are focused on the near term. On Thursday, New York Fed President William Dudley said the case for a U.S. interest rate hike in September has become less compelling. The remarks added support to gains in equities. However, he did not say September was off the table, instead adding that the Fed would review data and market conditions. The latest report on pending home sales is due at 10:00 a.m. ET. After five days of gut-wrenching, triple-digit declines, the Dow surged 619 points into Wednesday's close, finishing the day at 16,285. The S&P 500 was up nearly 73 at 1,940.5. The S&P 500 rose out of correction territory, while the Nasdaq Composite closed right on the edge of breaking out and the Dow Jones industrial average remained in correction mode. Stock markets in Asia and Europe saw strong gains Thursday, with China's Shanghai Composite index closing up 5.4 percent to reclaim the critical 3,000 mark, tracking the upbeat sentiment across the region underpinned by Wall Street's biggest one-day gain since 2011 overnight. The positive close in China marked the first higher finish in five trading sessions after sentiment in the U.S. managed to outweigh the fears surrounding China's slowing economy, which has been partly responsible for the recent sell off seen in global stocks. Nikkei rises 1.1%. Equity markets in Japan were on a tear, with the benchmark Nikkei 225 posting a broad-based rally and the Topix index surging 1.5 percent. Oil prices jumped more than 3 percent on Thursday after a rally in equity markets and an unexpected fall in U.S. crude inventories, but worries over the health of the Chinese economy and a global oil glut kept the outlook uncertain. Front-month Brent, the global oil benchmark, was up $1.45 at $44.59 a barrel by 7:53 a.m. EDT (1153 GMT). U.S. crude was up $1.33 at $39.93 a barrel. Gold steadied on Thursday after its biggest one-day drop in five weeks, supported by speculation that a U.S. rate hike may take longer than expected but still under pressure from a rebound in stock markets and a firmer dollar. Spot gold as down 0.3 percent at $1,121.96 an ounce, while U.S. gold futures for December delivery were down $3.50 at $1,121.10.