Friday May 25th

25-05-2018

Futures point to lower open as Wall Street juggles solid earnings, geopolitical fears

U.S. stock index futures pointed to a flat open Friday morning as solid corporate earnings offset geopolitical fears after President Donald Trump called off a key summit with North Korea. At around 8:24 a.m. ET, Dow futures fell 42 points, indicating an implied opening drop of 31 points. The Nasdaq and S&P 500 futures pointed to a flat start to the session for both of their respective markets. Trading volume has been below its recent trend this week as traders leave Wall Street ahead of the long weekend. Markets will be closed Monday for the Memorial Day holiday. A string of solid earnings reports has kept equities afloat this week, with Foot Locker adding to the optimism on Friday. The athletic shoe retailer handily beat Wall Street expectations, posting adjusted earnings per share of $1.45 versus expectations of $1.24 per share. It posted revenue of $2.03 billion, also ahead of estimates. The company's stock was up more than 13 percent in premarket trading following the report. Several other S&P 500 components also gave investors reason for optimism throughout the week, including home improvement retailer Lowe's. Though the Mooresville, North Carolina-based company missed expectations for the first quarter on Wednesday, its stock rose more than 10 percent after it maintained its annual financial targets. Shares also rallied after famed hedge fund manager Bill Ackman revealed a $1 billion stake in the company; the stock is up more than 12 percent since Tuesday's close. High-end jeweler Tiffany & Co., meanwhile, is having one of its best weeks on Wall Street. The company's stock rose more than 23 percent after reporting that same-store sales rose 7 percentin the quarter, overshooting expectations of only 2.6 percent. It also raised its full-year guidance in light of the solid beat. The New York-based company suggested its comeback plan is working to retain price-conscious millennial shoppers from drifting to new competitors. Its stock is up 22.3 percent this week. The generally buoyant sentiment following the earnings numbers was tempered after President Trump's abrupt decision to scrap a landmark summit with North Korean leader Kim Jong Un. The meeting would have been the first face-to-face encounter between a sitting U.S. president and a North Korean premier. In response, Pyongyang's vice foreign minister said the country still hoped for a "Trump formula," before adding the Asian state would remain open to resolving long-standing issues with the world's largest economy. This helped market sentiment to recover Friday morning with European stocks posting solid gains. The Stoxx Europe 600 rose 0.3 percent Friday, while the Korean Kospi lost 0.2 percent. Greater China markets eased in the morning, with Hong Kong's Hang Seng Index slipping 0.48 percent by 3:00 p.m. HK/SIN as energy and tech sector stocks moved lower. On the mainland, the Shanghai composite edged down by 0.4 percent to finish at 3,142.17 and the Shenzhen composite declined 0.93 percent to 1,810.03. Japan's Nikkei 225 erased early losses to close higher by 0.06 percent, 13.78 points, at 22,450.79. U.S. stocks finished lower on Thursday on the news of the canceled summit in Singapore. The Dow Jones industrial average fell 75 points to finish at 24,811.76 by the closing bell, well off a 280-point drop immediately after Trump's statement. Oil prices fell more than 2 percent towards $77 a barrel on Friday as Saudi Arabia and Russia said they were ready to ease supply curbs that have pushed crude prices to their highest since 2014. Russian Energy Minister Alexander Novak and Saudi counterpart Khalid al-Falih met in St. Petersburg to review the terms of the global oil supply pact that has been in place for 17 months. The ministers, along with their counterpart from the United Arab Emirates, discussed an output increase of about 1 million barrels per day (bpd), sources told Reuters. Brent crude futures fell $1.99, or 2.5 percent, to $76.80 per barrel at 8:37 a.m. ET (1237 GMT), falling further from this month's peak of $80.50, the highest level since November 2014. U.S. West Texas Intermediate (WTI) crude futures were down $2, or 2.8 percent, at $68.71 a barrel. Gold prices eased slightly on Friday after breaking above $1,300 an ounce in the previous session when U.S. President Donald Trump called off a meeting with North Korean leader Kim Jong Un, raising political tensions. Spot gold was flat at $1,304.23 an ounce by 8:20 a.m. ET and on track for a weekly gain of 1.1 percent, its biggest since March. U.S. gold futures for June delivery were 0.07 percent lower at $1,303.60.