Thursday October 20th

20-10-2016

US stock futures lower after ECB keeps interest rates unchanged; data in focus

U.S. stock index futures traded lower Thursday after the European Central Bank decided against changing its interest rates. The decision to keep policy unchanged was expected by nearly all 71 analysts polled by Reuters, even as the vast majority of them still expect the ECB to extend the bond buying program when the Governing Council next meets in December. Facing high unemployment, weak growth and ultra low inflation, the ECB has provided extraordinary stimulus in recent years, cutting interest rates deep into negative territory and pushing the cost of credit to all-time lows, hoping to jump start growth. Although inflation reached a two-year high of 0.4 percent in September and will continue rising in the coming months, it will not hit the ECB's close to 2 percent target until late 2018 or early 2019, according to the bank's forecasts. ECB President Mario Draghi said in a news conference the central bank will preserve very substantial amount of monetary policy support as risks remain to the downside. Investors also digested the final U.S. presidential debate, as market strategists generally said it helped Hillary Clinton maintain her lead over Donald Trump. On the earnings front, Microsoft, PayPal, Boston Beer and Morningstar are among companies set to report after the bell. Dow component Verizon reported mixed quarterly results, beating estimates on the bottom line while missing at the top. Travelers, another Dow component, beat estimates on both the top and bottom lines. On the data front, initial jobless claims rose to 260,000, with existing home sales and leading indicators set to be released at 10:00 a.m. In Europe, the pan-European Stoxx-600 index slipped 0.22 percent after the ECB's decision. In Asia, Japan's Nikkei closed 1.39 percent higher. The Shanghai Composite in China closed flat. Across the Korean Strait, the Kospi finished flat at 2,040.60. Hong Kong's Hang Seng index was up 0.28 percent in late-afternoon trade. Oil prices fell on Thursday as traders took profits off the table following the previous day's rally on another unseasonal draw in U.S. crude oil stocks. U.S. West Texas Intermediate (WTI) crude oil futures were down 82 cents, or 1.6 percent, at $50.78 per barrel at 8:30 a.m. ET (1230 GMT). Brent crude futures fell 79 cents, or 1.5 percent, at $51.88 per barrel. Traders said the moves were a result of profit-taking after WTI futures settled at a 15-month high the previous day, fueled by a fall in U.S. crude stocks by 5.2 million barrels in the week ended Oct. 14 to 468.7 million barrels. Gold rose for a third day on Thursday, helped by an uptick in the euro, after the European Central Bank left interest rates unchanged and maintained the parameters of its 1.74 trillion euro ($1.95 trillion) asset buying scheme. Spot gold was up 0.2 percent at $1,271.83 an ounce. On Wednesday, it had hit its strongest since Oct.5 at $1,273.34. U.S. gold futures were up 0.2 percent at $1,272.500 an ounce.