Futures Pointing To Continued Strength On Wall Street

The major U.S. index futures are currently pointing to a modestly higher open on Thursday, with stocks poised add to the substantial gains posted over the two previous sessions.

Stocks may continue to benefit from optimism about what a second Donald Trump presidency will mean for the markets and the U.S. economy.

Overall trading activity is likely to be somewhat subdued, however, as traders look ahead to the Federal Reserve’s monetary policy announcement this afternoon.

With the Fed widely expected to lower rates by 25 basis points, traders are likely to pay close attention to the accompanying statement for clues about the outlook for future rate cuts.

Ahead of the announcement, CME Group’s FedWatch tool is indicating a 67.4 percent chance the Fed will cut rates by another 25 basis points in December but a 32.2 percent chance rates will be left unchanged.

On the U.S. economic front, a report released by the Labor Department showed a modest rebound by first-time claims for U.S. unemployment benefits in the week ended November 2nd.

Stocks skyrocketed during trading on Wednesday, as traders celebrated Donald Trump’s victory in the presidential election. The major averages added to the strong gains posted during Tuesday’s session, reaching new record closing highs.

The major averages saw further upside in late-day trading, reaching new highs for the session. The Dow soared 1,508.05 points or 3.6 percent to 43,729.93, the Nasdaq surged 544.29 points or 3.0 percent to 18,983.47 and the S&P 500 shot up 146.28 points or 2.5 percent to 5,929.04.

The extended rally on Wall Street came after former President Trump was declared the winner in the presidential election versus Vice President Kamala Harris.

Claiming victory in several key swing states, Trump is projected to win far more than the 270 Electoral College votes needed to secure his return to the White House.

The decisive victory helped avoid the uncertainty that would be created by a prolonged vote counting process and potential legal challenges.

Trump is also seen by the markets as better for corporations and likely to renew the tax cut package enacted during his first term, which was due to expire at the end of 2025.

A Trump administration is also expected to scale back government regulations and be less hostile to mergers and acquisitions.

However, Trump has also called for increased tariffs on China and other countries, which could lead to renewed inflation concerns.

“A side effect of tariffs and higher prices would be interest rates staying higher for longer, which would be unhelpful for the housing market which, in turn, will act as a drag on home-related categories,” said Neil Saunders, Managing Director of GlobalData.

He added, “While Trump promised lower interest rates, and wants more control over the setting of rates, it is not in his immediate gift to enact this kind of change.”

Republicans are also projected to retake control of the Senate for the first time in four years, although control of the House remains up for grabs.

Financial stocks helped lead the rally on Wall Street amid optimism about reduced regulation under Trump, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index soaring by 10.7 percent and 8.2 percent, respectively.

Optimism about fewer regulations also contributed to substantial strength among oil service stocks, as reflected by the 7.8 percent spike by the Philadelphia Oil Service Index.

Airline stocks also showed a significant move to the upside, driving the NYSE Arca Airline Index up by 5.8 percent to its best closing level in over a year.

Telecom, natural gas, semiconductor and software stocks also saw considerable strength on the day, while gold, commercial real estate and pharmaceutical stocks moved sharply lower.

Commodity, Currency Markets

Crude oil futures are slipping $0.22 to $71.47 a barrel after falling $0.30 to $71.69 a barrel on Wednesday. Meanwhile, after plummeting $73.40 to $2,676.30 an ounce in the previous session, gold futures are climbing $14.10 to $2,690.40 an ounce.

On the currency front, the U.S. dollar is trading at 153.63 yen versus the 154.63 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0784 compared to yesterday’s $1.0729.

Asia

Asian stocks ended mixed on Thursday as upbeat Chinese trade data offset concerns over the impact of Trump’s policies on international trade, immigration and other key issues.

The dollar saw a modest pullback in Asian trading, oil prices fluctuated, and gold recovered some ground after falling sharply in the previous session as focus shifted to interest rate decisions from the Bank of England and the Federal Reserve due later in the day.

China’s Shanghai Composite Index jumped 2.6 percent to 3,470.66 as official data showed Chinese exports expanded the most in more than two years in October.

Exports grew 12.7 percent on a yearly basis following an increase of 2.4 percent in September, customs data revealed. Shipments were forecast to climb only 5.0 percent.

On the other hand, imports dropped 2.3 percent annually after a 0.3 percent increase in the previous month due to weaker domestic demand. Economists had forecast imports to drop 1.5 percent.

Hong Kong’s Hang Seng Index rallied 2 percent to 20,953.34 as hopes for more growth stimulus outweighed concerns over trade frictions posed by a second Donald Trump presidency. Trump vowed to impose tariffs of between 60 and 100 percent on Chinese imports.

Japanese markets ended mixed as investors locked in some gains. The Nikkei 225 Index dipped 0.3 percent to 39,381.41 as the dollar traded in the lower 154-yen zone after climbing the previous day. The broader Topix Index settled 1 percent higher at 2,743.08.

Seoul stocks ended little changed, with the Kospi finishing marginally higher at 2,564.63 after a choppy session.

Australian markets eked out modest gains, led by energy stocks, with Santos and Woodside adding 2-3 percent.

Sigma Healthcare shares soared nearly 25 percent after the competition regulator approved the company’s A$8.8 billion ($5.8 billion) merger with pharmacy chain Chemist Warehouse.

The benchmark S&P/ASX 200 Index rose 0.3 percent to 8,226.30, while the broader All Ordinaries Index closed 0.3 percent higher at 8,481.60.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index ended down 0.5 percent at 12,581.38.

Europe

European stocks are mostly higher on Thursday, as traders react to an interest rate cut by the Bank of England and look ahead to the Federal Reserve’s monetary policy announcement later in the day.

Investors will pay close attention to Fed Chair Jerome Powell’s comments on the policy outlook after Trump’s victory.

Meanwhile, the Bank of England reduced its benchmark rate for the second time this year, citing continued progress in disinflation.

The Monetary Policy Committee decided to lower the rate by 25 basis points to 4.75 percent. The outcome of the two-day meeting matched expectations.

Earlier in the day, Norway’s central bank held its policy interest rate unchanged at a 16-year high of 4.50 percent.

Investors are also digesting the ramifications of political upheaval in Germany. The German coalition government collapsed as Chancellor Olaf Scholz sacked his finance minister in a late-night move after a marathon of crisis meetings.

The three remaining ministers of the Free Democrats also resigned later at night, paving the way for a snap election.

In economic news, official data showed Germany’s industrial production declined more than expected in September.

Industrial production posted a monthly decrease of 2.5 percent, partially offsetting the 2.6 percent increase in August, Destatis reported.

German exports declined for the first time in three months in September, while imports recovered from last month, shrinking trade surplus.

Elsewhere, U.K. house prices increased for the fourth straight month to hit a record high in October, but prices are expected to climb at a moderate pace as slower interest rate cuts by the Bank of England and new government policies might damp demand, mortgage lender Halifax said.

While the German DAX Index has shot up by 1.5 percent, the French CAC 40 Index is up by 0.6 percent and the U.K.’s FTSE 100 Index is just above the unchanged line.

ArcelorMittal, the world’s second-biggest steelmaker, has moved sharply higher after its third quarter core earnings fell less than expected.

Lender Banco BPM has also soared after saying it would launch a bid for full control of asset manager Anima Holding in a deal worth up to 1.6 billion euros ($1.7 billion). Anima shares have also surged percent.

SGL Carbon, a German manufacturer of carbon-based products, has also rallied despite posting lower profit and revenue for the third quarter.

Meanwhile, Air France-KLM has plunged after the airline reported a bigger-than-expected decline in its quarterly operating result and warned of higher annual costs.

J Sainsbury has also tumbled as the British supermarket group kept its forecast for full-year profit growth of up to 10 percent.

Telecoms company BT Group has also moved sharply higher after cutting revenue expectations due to a weak outlook for its business department.

Rolls-Royce Holdings has also plunged after the engine maker said supply chain issues are continuing to hamper production.

U.S. Economic News

Labor productivity in the U.S. increased by slightly less than expected in the third quarter, according to a report released by the Labor Department on Thursday, while unit labor costs rose by much more than expected.

The Labor Department said labor productivity shot up by 2.2 percent in the third quarter after surging by a downwardly revised 2.1 percent in the second quarter.

Economists had expected labor productivity to jump by 2.3 percent compared to the 2.5 percent spike that had been reported for the previous quarter.

Meanwhile, the report said unit labor costs surged by 1.9 percent in the third quarter after spiking by an upwardly revised 2.4 percent in the second quarter.

Unit labor costs were expected to rise by 0.5 percent compared to the 0.4 percent increase that had been reported for the previous quarter.

A separate report released by the Labor Department on Thursday showed a modest rebound by first-time claims for U.S. unemployment benefits in the week ended November 2nd.

The Labor Department said initial jobless claims crept up to 221,000, an increase of 3,000 from the previous week’s revised level of 218,000.

Economists had expected jobless claims to rise to 221,000 from the 216,000 originally reported for the previous week.

The uptick came a week after jobless claims dropped to their lowest level since hitting 216,000 in the week ended May 18th.

At 10 am ET, the Commerce Department is scheduled to release its report on wholesale inventories in the month of September. Wholesale inventories are expected to edge down by 0.1 percent.

The Federal Reserve is due to announce its monetary policy decision at 2 pm ET, followed by Fed Chair Jerome Powell’s post-meeting press conference at 2:30 pm ET.

At 3 pm ET, the Fed is scheduled to release its report on consumer credit in the month of September. Consumer credit is expected to increase by $14.5 billion.