The Wednesday Market Minute
- Global stocks hit a record high following yesterday’s rally on Wall Street that lifted the Dow Jones Industrial Average past the 30,000 point mark for the first time in history.
- Record closes on Wall Street come amid renewed vaccine hopes, a Biden transition to the White House and better-than-expected activity data from the world’s biggest economy.
- A deluge of economic data Wednesday, as well as market closures on Thursday and thin liquidity Friday, keep gains in check in pre-market trading.
- Oil prices extend gains on energy demand bets, lifting prices to the highest since early March, while the dollar continues to edge lower, on pace for its worst year since 2017.
- Wall Street futures point to softer open ahead of GDP data, weekly jobless claims and durable goods orders at 8:30 am Eastern time as well as third quarter earnings from Deere & Co.
U.S. equity futures edged lower Wednesday, with the Dow holding just above the 30,000 point mark it breached during yesterday’s rally, as markets braced for a pre-Thanksgiving deluge of economic data while tracking coronavirus infection rates at home and abroad.
The Dow’s historic breakthrough on Tuesday, which was part of a 450 rally on the session that added to the benchmark’s best monthly performance since 1987, prompted the broadest measure of global stocks — the MSCI World Index — into a fresh record high Wednesday as investors continue to bet on a post-COVID recovery and a new and outward-looking administration in the White House.
President Elect Joe Biden, in fact, began assembling his senior cabinet this week, with an emphasis on political veterans and Wall Street favorites that suggest he is ready to build a slower, yet firmer consensus with allies and adversaries on issues such as trade with China, security concerns with Russia and co-operative economic policies with the European Union.
Stocks are likely to hold steady heading into today’s session, however, as investors will need to navigate a condensed calendar of economic data releases before markets are closed on Thursday and liquidity is typically thinned on Black Friday.
The Commerce Department will publish is second reading of second quarter GDP at 8:30 am Eastern time, following the initial estimate of a record 33.1% advance, alongside weekly jobless claims data and durable goods orders for the month of October. At 10:00 am Eastern time, data on consumer spending, consumer sentiment and new home sales are expected, with minutes of the Federal Reserve’s November policy meeting will be released at 2:00 pm Eastern time.
Futures contracts tied to the Dow are indicating a modest 40 point decline from Tuesday’s record-high close of 30,046.24 points, while those linked to the S&P 500 suggest only a half a point tick lower for the broader benchmark, which has gained 11.2% so far this month.
The Nasdaq Composite, which is up 9.3% for the month, is priced for a 35 point opening bel gain ahead of a Thanksgiving shopping weekend that is expected to generate ecommerce sales of just over $39 billion, a 40% increase from last year, according to data from emarketer.com.
Outside of the U.S., however, markets were mixed, with European shares slipping from yesterday’s 9-month highs amid fresh Chirstmas lockdown orders in France and similar restrictions reportedly being planned in Germany, where coronavirus infections are set to reach 1 million in the coming days.
The Stoxx 600 was marked 0.2% lower in early trading in Frankfurt, while the FTSE 100 in London was fell 0.28% as the pound climbed to 1.3327 against the U.S. dollar, hitting the value of stocks on the index that earn most of their revenues in non-sterling currencies.
The U.S. dollar index, which tracks the greenback against its global currency peers, slipped 0.1% to 92.157 in overnight trading, putting it on pace for its worst annual performance since 2017 as investors worry that extra debt from stimulus spending, as well as myriad support efforts from the Fed, will continue to erode the value of the fiat.
Oil prices, which often move in the opposite direction of the dollar, added to weekly gains Wednesday amid a rally that has lifted crude prices to their highest levels since March on renewed bets on an increase in energy demand in the wake of vaccine rollouts early next year.
WTI crude futures contracts for January delivery, the new U.S. benchmark, traded 54 cents higher from their Monday close in New York and were changing hands at $45.45 per barrel in early European dealing, while Brent contracts for January delivery, the global benchmark, rose 71 cents to $48.51 per barrel.
Overnight in Asia, concerns over a wave of potential debt defaults from state-owned enterprises in China, following missed debt payments from three triple-A rated companies, pushed stocks lower in Shanghai and Shenzen and pulled the region-wide MSCI ex-Japan index 0.42% lower from yesterday’s all-time high.
In Tokyo, the Nikkei 225 hit another 29-year peak with a session gain of 0.5% that left the benchmark at 26,296.86 points.