Futures Pointing To Initial Weakness On Wall Street

The major U.S. index futures are currently pointing to a lower open on Friday, with stocks likely to move back to the downside after recovering from early weakness to end the previous session roughly flat.

After moving to the downside early in the session, stocks regained ground over the course of the trading day on Thursday. The major averages climbed well off their early lows and spent much of the day lingering near the unchanged line.

The major averages eventually ended the day narrowly mixed. While the Dow crept up 28.77 points or 0.1 percent to 43,325.80, the Nasdaq slipped 10.77 points or 0.1 percent to 20,020.37 and the S&P 500 edged down 2.45 points or less than a tenth of a percent to 6,037.59.

The early weakness on Wall Street came as some traders cashed in on the recent strength in the markets, which saw the Nasdaq and the S&P 500 nearly offset last week’s sell-off.

The Dow has closed higher for four straight sessions on the heels of a ten-day losing streak, while the Nasdaq and the S&P 500 has moved higher for three straight days.

Selling pressure waned shortly after the start of trading, however, as many traders remained away from their desks following the Christmas Day holiday on Wednesday.

Many major markets overseas remained closed on Thursday in observance of Boxing Day, which may also have kept some traders on the sidelines.

On the U.S. economic front, the Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits unexpectedly edged slightly lower in the week ended December 21st.

The report said initial jobless claims slipped to 219,000, a decrease of 1,000 from the previous week’s unrevised level of 220,000. Economists had expected jobless claims to rise to 224,000.

Reflecting the lackluster close by the broader markets, most of the major sectors ended the day showing only modest moves.

Brokerage stocks showed a notable move to the upside, however, with the NYSE Arca Broker/Dealer Index climbing by 1.0 percent.

Commodity, Currency Markets

Crude oil futures are jumping $0.68 to $70.30 a barrel after falling $0.48 to $69.62 a barrel on Thursday. Meanwhile, after climbing $18.40 to $2,653.90 an ounce in the previous session, gold futures are sliding $17.30 to $2,636.60 an ounce.

On the currency front, the U.S. dollar is trading at 157.75 yen versus the 157.99 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0431 compared to yesterday’s $1.0422.

Asia

Asian stocks ended mixed on Friday, with Japanese markets leading regional gains on yen weakness while Seoul stocks tumbled amid an ongoing political turmoil in the country.

Mainland Chinese and Hong Kong markets ended on a muted note after official data showed China’s industrial profits dropped in November for a fourth straight month.

China’s Shanghai Composite Index finished marginally higher at 3,400.14 after a choppy session. Hong Kong’s Hang Seng Index ended flat with a negative bias at 20,090.46.

The World Bank has raised its forecast for China’s economic growth in 2024 and 2025 but warned that weak household and business confidence, combined with headwinds in the property sector, will continue to undermine growth in the coming year.

Markets are still waiting for more clarity on Beijing’s stimulus plans amid an apparent shift to a more proactive fiscal policy and a moderately loose monetary policy next year.

Japanese markets rallied as signs that the Bank of Japan may delay interest rate hikes amid Trump’s tariff threats offset a stronger-than-expected Tokyo inflation reading.

Separate data released today showed Japan’s industrial output fell for the first time in three months in November.

The Nikkei 225 Index jumped 1.8 percent to 40,281.16, while the broader Topix Index settled 1.3 percent higher at 2,801.68.

The yen languished near a five-month low after Bank of Japan Governor avoided giving a clear signal on interest rates next month.

Toyota Motor rose 1.5 percent after the automaker announced an ambitious plan to double its return on equity to 20 percent by 2030. Honda Motor climbed 2.1 percent, while Nissan Motor slumped 7.8 percent. SoftBank Group, Sony and Fast Retailing rallied 2-3 percent.

Seoul stocks slumped as the acting President faced an impeachment vote amid a political crisis sparked by the Constitutional Court’s first hearing on President Yoon Suk Yeol’s short-lived martial law.

The Kospi fell 1.0 percent to 2,404.77, marking its third consecutive session of declines as the won-dollar exchange rate surpassed 1,480 won for the first time in over 15 years -raising concerns about capital outflows.

Australian markets ended higher as trading resumed after the holiday break. The benchmark S&P/ASX 200 Index rose half a percent to 8,261.80, while the broader All Ordinaries Index closed up 0.6 percent at 8,520.10. Buying was seen across sectors, with the exception of utilities and technology stocks.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index jumped 1 percent to 13,205.10.

Europe

European stocks were broadly higher on Friday as trading resumed after a two-day break for Christmas holidays.

While the U.K.’s FTSE 100 Index is nearly unchanged, the German DAX Index is up by 0.5 percent and the French CAC 40 Index is up by 0.7 percent.

Banks traded higher, with Commerzbank, BNP Paribas, Credit Agricole and Societe Generale rising 1-2 percent amid a surge in regional government bond yields.

Germany’s 10-year bond yield hit 2.346 percent, a peak since late November, in response to a surge in U.S. Treasury yields following a successful seven-year auction.

The yield spread with French bonds widened amid concerns over the country’s fiscal deficit.

France’s new premier Francois Bayrou has vowed to sharply narrow the nation’s deficit to close to 5 percent of GDP, a level his predecessor unsuccessfully tried to reach.

Delivery Hero SE shares slumped 5.2 percent. Taiwan has rejected Uber Technologies’ plan to acquire the German online takeaway food company’s Foodpanda local business for $950 million, arguing it would decrease competition.

Energy giant BP Plc and peer Shell were moving higher in London, as oil ticked up and remained on track for a weekly gain on expectations economic stimulus efforts will prompt a recovery in China, the world’s second-largest economy.

Miners traded lower after iron ore sank to the lowest in more than five weeks — falling below $100 a ton — after the release of disappointing industrial profits data from China.

Anglo American fell 1.4 percent, while Glencore and Antofagasta both slipped around half a percent.

U.S. Economic News

The Energy Information Administration is scheduled to release its report oil inventories in the week ended December 20th at 1 pm ET.

Crude oil inventories are expected to decrease by 1.6 million barrels after dipping by 0.9 million barrels in the previous week.