Thursday July 14th

14-07-2016

US futures pull back after Bank of England leaves rates unchanged

U.S. stock index futures traded off their highs on Thursday after the Bank of England left interest rates unchanged. Market consensus was for a 25 basis point rate cut to 0.25 percent, which would've been the bank's first move since 2009. Dow futures were up about 150 points after rising more than 170 points. S&P and Nasdaq futures held higher by 16 points and 29 points, respectively. Theresa May was formally installed as U.K. prime minister on Wednesday evening, ending the uncertainty regarding who would lead the country after David Cameron announced his resignation. May is viewed as a steady pair of hands to lead the country through difficult Brexit negotiations with the European Union (EU). "Since the surprise vote to leave the EU, the U.K. economic outlook has darkened, with early indications of a marked deterioration in sentiment and anecdotal evidence that firms are putting investment and recruitment decisions on ice," Mantas Vanagas, economist at Daiwa Capital Markets, said in a note on Wednesday. The Dow Jones industrial average set a record high again on Wednesday, notching up a four-day winning streak. Gains followed overnight in Asian and in European equity trade early on Thursday. However, the Singapore Exchange was halted due to a systems glitch. The focus in the U.S. will be on second-quarter earnings and the latest weekly jobless claims. There will also be Producer Price Index (PPI) figures for June. BlackRock posted quarterly results in line with expectations, while JPMorgan Chase easily beat estimates. Asian markets ended mostly higher, with major indexes extending their week-long rallies, while trading in Singapore's securities market was halted due to a system glitch. Japan's Nikkei 225 was the standout performer, adding a gain of 8.46 percent for the week, after closing up 154.46 points, or 0.95 percent, at 16,385.89. The Topix closed up 10.90 points, or 0.84 percent, at 1,311.16. Across the Korean Strait, the Kospi closed up 3.22 points, or 0.16 percent, at 2,008.77, retracing losses of some 0.2 percent. The South Korean benchmark index is up 2.32 percent for the week. In Hong Kong, the Hang Seng index closed up 238.69 points, or 1.12 percent, at 21,561.06. Chinese mainland markets closed mixed, with the Shanghai composite down 6.77 points, or 0.22 percent, at 3,053.91, while the Shenzhen composite finished up 3.2 points, or 0.16 percent, at 2,044.93. Crude oil prices recovered about $1 a barrel from sharp losses on Thursday as the dollar eased. But brokers said the downtrend could resume soon as record-high stocks and worries over slowing economic growth dampened sentiment. Brent crude oil was up $1.08, or 2.3 percent, at $47.34 a barrel by 9 a.m. ET (1300 GMT). U.S. crude was up $1, or 2.2 percent, at $45.75. Both crude oil benchmarks moved up swiftly as the dollar slipped after the Bank of England decided unexpectedly to keep UK interest rates unchanged in the wake of the country's vote last month to leave the European Union. Gold fell on Thursday after rising nearly 1 percent in the previous session, as the dollar strengthened against the yen and Asian stocks stayed near eight-month highs. The Bank of England announced it would not cut interest rates. The central bank was expected to halve its benchmark interest rate to a record low of 0.25 percent when it made a monthly policy statement. Spot gold was down 1.03 percent at $1,328.86 per ounce. It rose about 0.9 percent on Wednesday, closing at $1,342.45.