Thursday August 8th

8-08-2019

Stock futures rise as bond yields stabilize, China trade data beats estimates

U.S. stock index futures rose slightly Thursday as global bond yields stabilized while investors digested better-than-expected trade data out of China. At around 8:05 a.m. ET, Dow Jones Industrial Average futures traded 78 points higher, indicating a gain of 63 points at the open. S&P 500 and Nasdaq 100 futures also pointed to a slightly higher open. Futures also gained as Disney shares climbed 1% in the premarket. Disney’s gains come after an analyst at Credit Suisse upgraded the media giant to outperform from neutral, citing expectation for a successful Disney+ launch. Wall Street ended Wednesday little changed despite earlier falls following a dramatic move in bond yields. The U.S. 10-year Treasury yield briefly dipped below 1.6% to hit a 2016 low, but was back up near 1.72% by Thursday morning. Tumbling yields can signal global growth concerns from investors and fuel sharp pullbacks in equity markets. An escalation in trade tensions between China and the United States has accentuated these fears in recent days. Wall Street saw a wild ride Wednesday when the S&P 500 logged its biggest intraday comeback of the year. Strong data out of China helped calm Wall Street down. China said exports rose 3.3% on a year-over-year basis in July. Economists polled by Reuters expected exports to fall by 2%. The data helped Asian stocks rise overnight. The Shanghai Composite gained 0.9% while the Nikkei 225 climbed 0.4%. Hong Kong’s Hang Seng index gained 0.54%, as of its final hour of trading. Over in South Korea, the Kospi ended its trading session higher by 0.57% at 1,920.61. However, gains in the U.S. were kept in check as investors are also monitoring the yuan, after China’s central bank set the official reference rate for the Chinese currency at 7.0039 yuan per dollar on Thursday — the weakest level since April 21, 2008. Caterpillar shares also capped gains, falling more than 1% after an analyst at Goldman Sachs downgraded it to neutral from buy. The analyst said headwinds from China and North America’s construction equipment markethinder him from justifying a buy rating on Caterpillar. China set the yuan’s midpoint above 7 per U.S. dollar earlier this week. That sparked the worst sell-off on Wall Street for 2019. Oil jumped more than $1 a barrel on Thursday due to expectations that falling prices may lead to production cuts, coupled with a steadying of the yuan currency after a week of turmoil spurred by an escalation of U.S.-China trade tensions. Brent crude had rebounded to $57.57, up $1.34 or 2.4%, by 0844 GMT. U.S. West Texas Intermediate (WTI) crude futures jumped $1.49, or 2.9%, to $52.58 a barrel. Gold eased slightly on Thursday after a surge above $1,500 for the first time since April 2013 in the previous session in response to U.S.-China trade uncertainties and growing signs of an economic slowdown. Spot gold was down 0.3% at $1,496.52 per ounce. U.S. gold futures fell 0.7% to $1,508.30 per ounce. “Given how aggressively gold has gained quite in the past few days, it’s only natural for prices to retrace before pushing back higher,” FXTM analyst Lukman Otunuga said.