Friday March 22nd

22-03-2019

Dow set to fall more than 150 points at the open as growth concerns persist, Nike falls

U.S. stock index futures fell Friday amid jitters over global economic growth sparked by dreadful manufacturing data out of Europe and the Federal Reserve's cautious outlook on the U.S. economy. At around 8:17 a.m. ET, Dow Jones Industrial Average futures were down 185 points, indicating a decline of more than 150 points at the open. Futures on the S&P 500 and Nasdaq 100 also dropped. Nike shares also pressured stock futures. The athletic apparel company's stock pulled back nearly 5 percent on the back of weak quarterly sales growth in North America. IHS Markit said Friday that manufacturing activity in Germany dropped to its lowest level in more than six years in March. In France, manufacturing and services slowed down to their lowest levels in three months and two months, respectively. For the euro zone as a whole, manufacturing fell to its lowest level since April 2013. These data sent the German 10-year bund yield to their lowest level since 2016, briefly dipping into negative territory. In the U.S., the spread between the 3-month Treasury bill yield and the 10-year note rate turned negative for the first time since 2007, thus inverting the so-called yield curve. An inverted yield curve happens when short- term rates surpass their longer-term counterparts. This is considered a trustworthy indicator of a recession coming in the near future. These moves come after U.S. central bank surprised investors by adopting a sharp dovish stance on Wednesday, projecting no further interest rate hikes this year and ending its balance sheet roll-offs. Market sentiment was boosted by the Fed's updated outlook on interest rates, but the reasons behind it caused some concern. Stocks were on track to post solid gains for the week as sharp increases in the tech and consumer discretionary sectors curbed lingering worries over U.S.-China trade talks. A U.S. trade delegation, headed by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, will visit China for a two-day meeting at the end of next week. Chinese Vice Premier Liu He is then expected to travel to Washington in early April. President Donald Trump said in an interview that aired Friday that talks were going well. However, he also said tariffs on Chinese goods would only come off once China complied with the agreed upon trade deal. The long-running trade dispute between the world's two largest economies has battered financial markets in recent months, souring business and consumer sentiment. Major Asian stock markets closed little changed on Friday following a roller-coaster session that sent shares oscillating between positive and negative territory as investors grappled with the consequences of a more dovish U.S. Federal Reserve. The mainland Chinese markets, saw gains on the day as the Shanghai composite rose slightly to about 3,104.15 and the Shenzhen component saw fractional gains to approximately 9,879.22. The Shenzhen composite gained 0.203 percent to around 1,700.94. Hong Kong's Hang Seng index closed about 0.14 percent higher at 29,113.36. Japan's Nikkei 225 closed slightly higher at 21,627.34, as shares of index heavyweights Softbank Group and Fanuc jumped 2.73 percent and 1.40 percent, respectively. The Topix index ended its trading day higher by 0.17 percent at 1,617.11. Over in South Korea, the Kospi closed marginally higher at 2,186.95. Oil fell further from 2019 highs on Friday, but was set for a third straight week of gains due to supply cuts led by producer club OPEC and by U.S. sanctions on Iran and Venezuela. Brent crude futures were at $67.39 per barrel at 0942 GMT, 47 cents below their last close. Brent hit a four-month high of $68.69 on Thursday. The benchmark has risen by just under a third since the beginning of January, when OPEC started to cut production. U.S. West Texas Intermediate (WTI) futures were at $59.53 per barrel, down 45 cents from their last settlement. WTI marked a 2019 peak in the previous session at $60.39. Both contracts were on course for their third consecutive week of increase. Gold was little changed on Friday below a three-week peak hit the day before, pressured by rising stock markets but remaining on track for a third straight weekly gain after the U.S. Federal Reserve said there would be no further interest rate hikes this year. Spot gold was up about 0.1 percent at $1,311.06 per ounce as of 0833 GMT, while U.S. gold futures gained 0.3 percent to $1,310.80 an ounce. Spot prices rose to their highest since Feb. 28 at $1,320.22 on Thursday, before paring gains to end the day down 0.2 percent.