Thursday October 17th

17-10-2019

Stock futures rise after a new draft Brexit deal is reached

U.S. stock index futures rose Thursday after a draft Brexit deal was struck between the European Union and the U.K. Around 7:40 a.m. ET, Dow Jones Industrial Average futures were up 82 points, indicating a gain of about 70 points at the open. Prior to the Brexit reports, futures had been trading flat to lower. Futures on the S&P 500 and Nasdaq 100 were also higher. U.K. Prime Minister Boris Johnson said “we have a great new Brexit deal” via Twitter. He called on British lawmakers to back the deal when it’s put before Parliament on Saturday. Meanwhile, European Commission President Jean-Claude Juncker tweeted that the deal was a “fair and balanced” one. The Northern Irish Democratic Unionist Party (DUP), however, said earlier in the day that it could not support the British government’s Brexit plans “as it stands.” Nonetheless, markets rallied on the Brexit reports, as the deal removed some investor uncertainty amid heightened concerns about the health of the global economy. On Wednesday, unexpectedly weak U.S. retail sales data fueled fears about a possible recession. Global economic data points to slower growth, while the U.S. manufacturing sector is already contracting. Among the greatest of the worries plaguing markets is the ongoing U.S.-China trade war. China emphasized today that the U.S. must remove tariffs in order for the two countries to reach a final agreement on trade. The two economic giants have been embroiled in a trade dispute for more than a year, with each country applying tariffs on billions of dollars’ worth of goods from the other. Even with Brexit looking promising and a trade deal with China in the works, some investors have doubts it will be clear sailing for stocks the rest of the year without more help from the Federal Reserve. CNBC’s Steve Liesman reported on Thursday that the Fed may soon pause in its latest rate-cutting cycle, depending on economic data and China trade talks. That pause is more likely to occur after the October meeting. Back in the U.S., investors are likely to closely monitor a flurry of economic data and earnings reports on Thursday. Housing starts and building permits for September, and the Philadelphia Federal Reserve’s manufacturing index for October will be released at 8:30 a.m. ET. Industrial production data for September will follow slightly later in the session. The number of unemployed workers who applied for jobless benefits in the second week of October rose slightly, but layoffs nationwide remained near a 50-year low and showed no sign of rising despite a slowdown in the U.S. economy. Initial jobless claims, a rough way to measure layoffs, increased by 4,000 to 214,000 in the week of Oct. 6 to Oct. 12, the government said Thursday. Economists polled by MarketWatch had forecast a 215,000 reading. Asia Pacific markets traded mixed on Thursday as investors remained cautious over global growth outlook and the ongoing Brexit negotiations between the United Kingdom and the European Union. Chinese mainland markets were muted: Shanghai composite declined 0.12% to 2,975.18 while the Shenzhen composite and the Shenzhen component closed near flat. In Hong Kong, the Hang Seng index gained 0.53% in late-afternoon trade. Japan’s Nikkei 225 closed fractionally lower at 22,451.86 while the Topix index fell 0.45% to 1,624.16. South Korea’s Kospi index declined 0.23% to 2,077.94. Oil prices fell on Thursday as industry data showed a larger-than-expected build-up in U.S. inventories but losses were limited after the United Kingdom and the European Union announced they had reached a deal on Brexit. Global benchmark Brent crude oil was down by 36 cents at $59.06 a barrel. U.S. WTI crude oil was down 42 cents at $52.94. Gold eased, as investors digested a Brexit deal but lingering uncertainty on U.S.-China trade talks limited losses, while deficit-ridden palladium rose for a fourth straight session to yet another record high. Spot gold fell 0.3% to $1,485.48 per ounce. U.S. gold futures also dipped 0.3% to $1,488.90.