Thursday October 31st

31-10-2019

Stock futures fall on report that China has doubts over a long-term US trade deal

U.S. stock index futures turned lower on Thursday after a report raised doubt about a long-term U.S.-China trade deal. At around 7:10 a.m. ET, Dow Jones Industrial Average futures were down 70 points, indicating a loss of 64 points. S&P 500 and Nasdaq 100 futures were also down. Bloomberg News reported Thursday, citing unnamed sources, that Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. The report sent stock futures tumbling after they were trading higher. Trade bellwether Caterpillar slipped 0.9% while Micron Technology shares were down 1.1% in the premarket. Investors had been feeling optimistic about U.S.-China trade recently as both sides pointed to progress on a “phase one” accord being signed in November. China and the U.S. have been in a trade war since last year, slapping tariffs on billions of dollars worth of their goods. Futures had started Thursday on a positive note after the Federal Reserve cut interest rates by 25 basis points for the third time this year on Wednesday. Comments from Chairman Jerome Powell indicated that the central bank would be hitting pause on monetary policy easing for now, but there will be no hiking until inflation rises “significantly.” Stock futures had also gotten a boost earlier in the session from Apple and Facebook, which traded higher on better-than-expected earnings. Apple shares rose 1.7% after the tech giant posted earnings per share of $3.03 on revenue of $64 billion. Analysts polled by Refinitiv expected a profit of $2.84 per share on sales of $62.99 billion. The company’s iPhone and services revenues also topped estimates. Facebook, meanwhile, climbed more than 4% after the social-media company reported a profit of $2.12 per share, topping a Refinitiv estimate of $1.91 per share. Facebook also reported stronger-than-expected average revenue per user. So far, two thirds of the S&P 500 have reported quarterly numbers. Of those companies, 75% posted better-than-expected results, FactSet data shows. In other corporate news, Italian-American automaker Fiat Chrysler (FCA) is set to report earnings Thursday after announcing a landmark merger with French rival PSA Peugeot Citroen, which will create the world’s fourth-largest car maker. FCA will pay its shareholders a 5.5 billion euro ($6.1 billion) special dividend and the two companies will join forces through a 50-50 share swap. The new company’s shares will be listed in New York, Paris and Milan. A slew of economic data is due at around 8:30 a.m. ET on Thursday, including PCE (personal consumption expenditure) price index and Core PCE price index figures, along with personal income and spending. Figures are also expected on wages and the latest weekly jobless claims. Stocks in Asia were mixed on Thursday after the U.S. Federal Reserve cut interest rates for the third time this year and indicated the possibility of a pause in easing monetary policy. South Korea’s Kospi closed 0.15% higher at 2,083.48. In Japan, the Nikkei 225 rose 0.37% to close at 22,927.04. The Topix index finished slightly higher at 1,667.01. Meanwhile, mainland Chinese stocks slipped on the day. The Shanghai composite fell 0.35% to about 2,929.06 and the Shenzhen component was 0.48% to 9,635.33 while the Shenzhen composite declined 0.763% to around 1,616.19. Hong Kong’s Hang Seng index, on the other hand, advanced 0.76%, as of its final hour of trading. Oil prices hovered around breakeven on Thursday as investors hoped for  more economic stimulus by China after weak PMI data, partly recovering from losses in the previous session on a much larger than expected build in U.S. crude stocks. Brent crude futures were up 10 cents, at $60.71 a barrel. They dropped by 1.6% on Wednesday. U.S. West Texas Intermediate (WTI) crude futures were down 12 cents, or 0.2%, at $54.94 after a 0.9% decline in the previous session. Gold prices climbed on Thursday as the U.S. dollar weakened after the Federal Reserve cut interest rates for the third time this year, but signaled the monetary-easing cycle would be paused. Hopes that the United States and China will sign a preliminary agreement and call a truce to their 16-month trade war was also a factor behind the Fed’s decision to signal that further rate cuts are on hold. Spot gold was up 0.3% at $1,500.30 per ounce as of 0854 GMT. Prices have risen nearly 2% this month. U.S. gold futures rose 0.2% to $1,502.50 per ounce.