Dow Futures, Global Stocks Extend Gains on Rate Hopes; May Jobs Report in Focus
Frankfurt (June 7) Global stocks edged higher Friday, helping Wall Street futures eased towards a fourth consecutive session gain and their best week of the year, as investors anticipated a near-term immigration agreement between the U.S. an Mexico and extended bets on further central bank easing in major economies around the world.
Investors are also keenly awaiting May employment data from the Bureau of Labor Statistics later today that is expected to show the U.S. economy added 185,000 new jobs, while average hourly wages grew at a 0.3% clip, a figure that could either complicate the Federal Reserve's ability to cut rates or cement the market's expectation for at least two easing moves between now and the end of the year.
Reports of a potential breakthrough in talks between U.S. and Mexican officials yesterday in Washington helped Wall Street edge higher in the final hours of trading, with Vice President Mike Pence calling the second day of meetings ""encouraging" and describing "some movement on their part" from the Mexican side.
U.S. equity futures are indicating modest opening bell gains ahead of the May payroll report at 8:30 am Eastern time, with contracts tied to the Dow Jones Industrial Average suggesting a 110 point gain and those linked to the S&P 500 guiding to a 12 point bump higher for the broader benchmark.
Zoom Video Communications (ZM) shares were a notable early mover, surging 14.5% in pre-market trading after the web conferencing platform group posted stronger-than-expected first quarter profits in its first-ever report as a public company.
Elsewhere, however, further signs of an economic slowdown continue to build, with Germany reporting a staggering 3.7% plunge in April exports, the most in nearly four years, alongside a 1.9% contraction in industrial output.
The figures were grim enough for the country's central bank, the Bundesbank, to slash its 2019 GDP forecast in half, to just 0.6%, less than 24 hours after the European Central Bank had actually increased its own regional growth estimate to 1.2%.
European stocks, however, were solidly higher at the opening bell Friday, as investors bet the economic weakness would stir the ECB into a faster course of monetary easing following yesterday's comments from soon-to-be-outing President Mario Dragi that the Bank had room for both rate cuts and the resumption of quantitative easing.
The Stoxx 600 benchmark added 0.88% by mid-day of trading in Frankfurt, while the euro eased modestly to 1.1264 against the U.S. dollar and benchmark 10-year bund yields traded at a record low of -0.231%.
Stocks in China, however, were unable to follow the global market path of extending gains in the wake of easing signals from the central bank, with both the Shanghai Composite and the CSI 300 sliding firmly into the red despite comments from PBOC Yi Gang that the Bank has "tremendous" monetary policy space.
"We have plenty of room in interest rates, we have plenty of room in required reserve ratio rate, and also for the fiscal, monetary policy toolkit," Yi told Bloomberg News in an interview where he also hinted at allowing the yuan to drift below the 7 mark against the U.S. dollar if the trade war were to accelerate further.
The dollar, in fact, is on pace for its worst week in three months Friday, even as it edged 0.06% higher against a basket of global currencies in overnight trading, with investors eyeing today's payroll report and average hourly wage figures.
Global oil prices also continued to take advantage of a weaker U.S. dollar, rising for a third straight day from this week's bear market lows on comment from Saudi Energy Minister Khalid al-Falih that suggested OPEC members and their allies in Russia had agreed a deal that could extend production cuts well into the second half of the year.
Brent crude contracts for August delivery, the new global benchmark, were seen 59 cents higher from from their Thursday close in New York and changing hands at $62.26 per barrel while WTI contracts for the July were marked 52 cents higher at $53.11 per barrel.
TheStreet
