The Thursday Market Minute
- U.S. stock futures gain amid a surge in global crude prices following attacks on two shipping tankers in the Strait of Hormuz.
- Two ships reported being hit by missiles or explosives, while U.S. Navy vessels were sent in support, as tensions in the busy crude traffic lane intensify.
- Asia stocks slide prior to the oil surge on concerns over stall U.S.-China trade talks and slowing regional growth.
- European stocks get a boost from telecoms and tech shares but gains were cautious as investors continue to bid-up government bonds in the face of pending Fed and ECB rate cuts.
- Wall Street futures suggest modest gains ahead of weekly jobless claims and export price data at 8:30 am Eastern time. Broadcom will publish Q2 earnings after the close of trading.
U.S. stock futures traded higher Thursday, supported by an overnight surge in oil prices following attacks on ships in the Strait of Hormuz, even as global investors continue to favor defensive assets in the face of slowing economic growth and an uncertain path in U.S.-China trade talks.
Oil’s overnight rally, however, added an early bullish tinge to U.S. stocks, with crude surging nearly 4% from a five-month low after reports of two ships being damaged in the Strait area near the Gulf of Oman. U.S. Navy vessels were sent to support one of the ships, while early reports suggest both could have been hit by torpedoes in an attempt to disrupt traffic in one of the world’s busiest commodities shipping lanes.
U.S. crude prices were marked more than 4% higher at $53.08 per barrel following the attacks, while Brent futures contracts for August delivery, the global benchmark, jumped $2.34 per barrel from last night’s close to $62.30.
The moves helped boost early readings for Wall Street futures, with contracts tied to the Dow Jones Industrial Average indicated an 71 point opening bell gain and those linked to the S&P 500 guiding to a 9.2 point advance for the broader benchmark.
Alibaba Group Holding Co. (BABA – Get Report) shares edged higher in pre-market trading following multiple media reports that the online retailing giant has filed for a Hong Kong listing that could be worth as much as $20 billion.
Tyson Foods (TSN – Get Report) shares surged more than 4% in pre-market as it looks to take a bite out of Beyond Meat (BYND) with its first set of plant-based protein meat-like products, making it the largest U.S. meat producer to date to enter the growing alternative protein segment.
The expected U.S. gains contrast a defensive session in overnight trading, where investors focused on the lack of progress in stalled trade talks between Washington and Beijing — which President Donald Trump described as “a little testy” during a Rose Garden press conference with Poland’s President Andrzej Duda — and slowing regional growth prospects.
The MSCI ex-Japan benchmark, the broadest measure of regional share prices, slipped -0.32% while Japan’s Nikkei 225 fell 0.46%, weighed down by sagging chip stocks and a stronger yen.
European markets, however, were underpinned by both the surge in oil prices and a weaker U.S. dollar, which continues to edge lower against a basket of global currencies as investors extend bets on near-term rate cuts from the Federal Reserve.
Germany’s DAX performance index paced the regional gains, rising nearly 0.5% by late morning trading in Frankfurt as telecom shares surged following a government auction of 5G spectrum licenses.
Britain’s FTSE 100, which includes heavyweight oil majors Royal Dutch Shell (RDS.A – Get Report) and BP plc (BP – Get Report) , was marked 0.2% higher in London, with stocks getting a further boost from a weaker pound, which drifted to 1.2667 against the greenback after lawmakers failed to pass a bill last night that would have blocked the possibility of a so-called “hard Brexit” from the European Union.