The major U.S. index futures are currently pointing to a roughly flat open on Friday, with stocks likely to show a lack of direction as trading resumes following the Thanksgiving Day holiday on Thursday.
Many traders are likely to remain away from their desks following yesterday’s holiday, contributing to below average trading activity.
An early close for the markets at 1 pm ET along with a lack of major U.S. economic data is also likely to lead to subdued trading.
Nonetheless, stocks may still benefit from recent upward momentum, which has the major averages on pace for a solid week on optimism about slower interest rate hikes.
Stocks fluctuated over the course of the trading session on Wednesday before eventually closing mostly higher. The major averages added to the strong gains posted on Tuesday, with the Dow reaching a seven-month closing high, RTT News cited.
The major averages all finished the day in positive territory, led by the tech-heavy Nasdaq. While the Nasdaq jumped 110.91 points or 1.0 percent to 11,285.32, the S&P 500 climbed 23.68 points or 0.6 percent to 4,027.26 and the Dow rose 95.96 points or 0.3 percent to 34,194.06.
The higher close on Wall Street came following the release of the minutes of the Federal Reserve’s early November monetary policy meeting, which provided further evidence the central bank is considering slowing the pace of its interest rate hikes.
The minutes said a “substantial majority” of meeting participants judged that a slowing in the pace of rate hikes would likely “soon be appropriate.”
A slower pace of rate hikes would better allow the Fed to assess progress toward its goals of maximum employment and price stability, the minutes said.
However, a few other participates suggested it could be advantageous to wait until the rates were more clearly in restrictive territory and there were more concrete signs that inflation pressures were receding significantly before slowing the pace of rate hikes.
The minutes also said participants agreed further interest rate increases would be appropriate in order to attain a sufficiently restrictive stance to bring inflation down over time.
Various participants also indicated the ultimate level of the federal funds rate that would be necessary to achieve the Fed’s goals was somewhat higher than they had previously expected.
“The minutes of the Fed’s early-November policy meeting suggest that although most officials were in favor of slowing the pace of rate hikes at upcoming meetings, there was no consensus on how high the peak in rates would ultimately need to be, or how long to leave policy in that restrictive stance,” said Paul Ashworth, Chief North America Economist at Capital Economics.
The central bank’s next monetary policy meeting is scheduled for December 13-14, with CME Group’s FedWatch Tool currently indicating a 75.8 percent chance of a 50 basis point rate hike and a 24.2 percent chance of another 75 basis point rate hike.
The volatility seen for much of the day came as traders awaited the Fed minutes while digesting a mixed batch of U.S. economic data.
While separate Commerce Department reports showed notable increases in durable goods orders and new home sales in October, the Labor Department said initial jobless claims reached a three-month high in the week ended November 19th.
Tobacco stocks showed a substantial move to the upside on the day, driving the NYSE Arca Tobacco Index up by 2.9 percent to a three-month closing high.
Considerable strength was also visible among computer hardware stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Computer Hardware Index.
Computer and printer market HP Inc. (HPQ) posted a strong gain after reporting fiscal fourth quarter results that beat analyst estimates and announcing plans to cuts up to 6,000 jobs by the end of fiscal 2025.
Utilities, airline and semiconductor stocks also saw notable strength on the day, while energy stocks pulled back sharply along with the price of crude oil.
Commodity, Currency Markets
Crude oil futures are jumping $1.34 to $79.28 a barrel after plunging $3.01 to $77.94 a barrel on Wednesday. Meanwhile, after rising $5.70 to $1,745.60 an ounce in the previous session, gold futures are inching up $4.30 to $1,749.90 an ounce.
On the currency front, the U.S. dollar is trading at 139.35 yen versus the 138.54 yen it fetched on Thursday. Against the euro, the dollar is valued at $1.0366 compared to yesterday’s $1.0410.
Asia
Asian stocks turned in a mixed performance on Friday but posted weekly gains on optimism over a less hawkish Fed. A cautious undertone prevailed amid concerns over record-high domestic daily Covid-19 cases in China.
China’s Shanghai Composite Index rose 0.4 percent to 3,101.69 after a choppy session as the country grappled with increasing lockdowns that have fueled frustration among the population.
Videos posted on social media showed violent clashes in “iPhone City” Zhengzhou, which plays a key role in the technology supply chain.
Property developers topped the gainers list after China’s biggest commercial banks pledged at least $162 billion in fresh credit to the beleaguered sector.
Hong Kong’s Hang Seng Index closed 0.5 percent lower at 17,573.58, dragged down by tech firms.
Japanese shares fell and yields on the benchmark 10-year bond rose 0.5 basis points to 0.25 percent after data showed Tokyo’s inflation outpaced forecasts to hit its fastest clip since 1982.
The Nikkei 225 Index slipped 0.4 percent to close at 28,283.03 but gained 1.4 percent for the week on hopes for slower interest rate hikes in the United States. The broader Topix finished marginally lower at 2,018.
Dentsu Group shares fell 2.7 percent after reports that prosecutors raided the headquarters of the advertising company in connection with possible bid-rigging for Tokyo Olympics test events.
Seoul stocks ended a volatile session slightly lower on concerns about China’s worsening Covid-19 situation. The Kospi eased 0.1 percent to settle at 2,437.86. LG Chem, Naver, SK Hynix and KakaoTalk fell 1-2 percent.
Australian markets rose for the fourth straight day, with financials and technology stocks leading the advance. Mining and energy stocks fell on profit taking after recent strong gains.
The benchmark S&P/ASX 200 Index gained 0.2 percent to settle at 7,259.50, while the broader All Ordinaries Index closed 0.2 percent higher at 7,447.60.
Europe
European stocks are turning in a mixed performance on Friday, a day after the minutes of the European Central Bank meeting struck a hawkish tone, indicating that rates would need to rise further to curb inflation.
The euro has risen for a fourth straight day against the dollar after ECB Executive Board member Isabel Schnabel said, “Incoming data so far suggest that the room for slowing down the pace of rate adjustments remains limited.”
Investors also fretted about rising Covid-19 cases in China, with the country logging a record high increase in daily infections.
While the German DAX Index is down by 0.1 percent, the French CAC 40 Index is up by 0.1 percent and the U.K.’s FTSE 100 Index is up by 0.2 percent.
Devro has soared in London after agreeing to a 540-million-pound ($654.3 million) takeover by Saria SE & Co. KG through its subsidiary Saria.
SSE has also moved to the upside after it agreed to sell a 25 percent stake in its electricity transmission grid business to the Ontario Teachers’ Pension Plan Board.
Orange SA shares have also edged higher. The French telecommunications company has concluded a long-term agreement with 1&1 AG for the provision of international roaming services for the 1&1 mobile network.
Meanwhile, LSL Property Services has slumped. The provider of residential-property services said that it expects overall 2022 performance to miss prior expectations.
In economic news, official data showed the German economy expanded more than initially estimated in the third quarter, despite weaker global growth, delivery bottlenecks and rising inflation.
GDP grew 0.4 percent sequentially in the third quarter, faster than the 0.1 percent rise in the second quarter. The rate was revised up from 0.3 percent estimated on October 28.
Additionally, survey results from the market research group GfK showed that German consumer confidence is set to rise moderately in December. The forward-looking consumer confidence index rose to -40.2 from -41.9 in November.
Elsewhere, France’s consumer confidence improved slightly in November, in line with expectations, survey figures from the statistical office Insee showed.
The consumer confidence index rose to 83.0 in November from 82.0 in the previous month. However, the index was well below its long-term average of 100.
U.S. Economic Reports
No major U.S. economic data is scheduled to be released today.
