Thursday August 29th

29-08-2019

Dow futures jump more than 200 points after ‘calm’ trade comments from China

U.S. stock index futures turned positive Thursday after China said it wished to resolve its protracted trade dispute with the world’s largest economy with a “calm ” attitude. At around 7:10 a.m. ET, Dow Jones Industrial Average futures rose 263 points, indicating a gain of more than 274 points at the open. Futures on the S&P 500 and Nasdaq 100 were both higher, reversing earlier losses. When asked about its ongoing trade war with the U.S., China’s commerce ministry reportedly said Thursday that it was opposed to escalating trade tensions. The comments appeared to soothe investor concerns at a time when many are worried about the possibility of a global recession. Trade bellwethers Boeing and Caterpillar rose at least 1% each in the premarket. Micron Technology gained 2%. On Wednesday, the rate on the benchmark 30-year Treasury bond sank to an all-time low, while the U.S. yield curve inverted even further. The closely-watched spread between the 10-year Treasury yield and the 2-year rate briefly fell to negative 6 basis points in the previous session. The move extended losses from earlier in the week, when the spread registered its lowest level since 2007. A 10-year rate below the 2-year yield is viewed by fixed income traders as an important recession prognosticator, marking an unusual phenomenon as bondholders receive better compensation in the short term. On the data front, the number of Americans filing applications for unemployment benefits rose moderately, pointing to sustained labor market strength despite slowing economic growth. Initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 215,000 for the week ended Aug. 24, the Labor Department said on Thursday. Data for the prior week was revised to show 2,000 more applications received than previously reported. Last week’s increase in claims was in line with economists’ expectations. The U.S. economy slowed a bit more than initially thought in the second quarter as the strongest growth in consumer spending in 4-1/2 years was offset by declining exports and a smaller inventory build. Gross domestic product increased at a 2.0% annualized rate, the Commerce Department said in its second reading of second-quarter GDP on Thursday. That was revised down from the 2.1% pace estimated last month. The economy grew at a 3.1% rate in the January-March quarter. It expanded 2.6% in the first half of the year. The downward revision was in line with ecconomists’ expectations. Pending home sales for July will follow slightly later in the session. Stocks in major Asian markets were mixed on Thursday as investors continued to watch the yield curve in U.S. Treasurys, which inverted further overnight. Mainland Chinese shares dipped on the day, with the Shanghai compositeslipping 0.1% to about 2,890.92 and the Shenzhen component down 0.17% to 9,398.47. The Shenzhen composite was 0.172% lower at around 1,591.08. Hong Kong’s Hang Seng index, on the other hand, was up 0.28% as of its final hour of trading. The Nikkei 225 in Japan close slightly lower at 20,460.93, while the Topix finished its trading day largely flat at 1,490.17. Over in South Korea, the Kospi closed 0.4% lower at 1,933.41. Oil prices fell on Thursday for the first time in three days after San Francisco Federal Reserve President Mary Daly sounded a note of concern about the strength of the U.S. economy. Brent crude was down 31 cents, or 0.5%, at $60.18 a barrel by 0638 GMT while U.S. crude was down 18 cents, or 0.3%, at $55.60 a barrel. Oil prices rose around 1.5 percent in the previous session. Gold steadied near a six-year peak on Thursday and silver rose to its highest in more than two years as fears of a global recession, exacerbated by the protracted U.S.-China trade war, drove interest for safe havens. Spot gold was steady at $1,538.36 per ounce. Prices scaled $1,554.56 an ounce on Monday, their highest since April 2013. U.S. gold futures were down 0.1% at $1,547.10.