Wall Street looks set for a modestly softer open, but traders are likely to wait for today’s ECB rate decision for direction as the dollar holds steady and earnings continue.
U.S. equity futures nudged lower Thursday, while the dollar eased and oil prices extended their recent run of declines, as investors pared risk bets ahead of a key European Central Bank rate decision and broader concerns for the health of the global economy.
The ECB is expected to lift its key lending rate for the first time in eleven years later today in Frankfurt, while unveiling details of a package that would support indebted member states from undue pressure in the bond market.
Expectations of a hike of as much as 50 basis points have given the euro some support against the dollar this week, following its slump into parity against the U.S. dollar for the first time in two decades last month, but those bets have faded heading into today’s meeting, with the euro easing to 1.0190 and the U.S. dollar index falling 0.05% to 107.003 in overnight trading.
The ECB rate decision will be published at 8:15 am Eastern time, with a press conference from President Christine Lagarde at 8:45 am Eastern time.
Stocks Edge Lower, Tesla, United Airlines, Carnival And Ford In Focus – Five Things To Know
An earlier rate decision from the Bank of Japan was also broadly dollar positive, as Governor Haruhiko Kuroda lifted near-term inflation forecasts but maintained a key lending rate at -0.1% and pledged to hold long-term bond yields at 0% in order to support growth.
Two geo-political developments in Europe kept a lid on risk appetite, as well, as Italy’s Prime Minister Mario Draghi, a former ECB President, resigned amid a collapse of his fragile coalition government and Russia President Vladimir Putin repeated his warning that gas from the newly re-opened Nord Stream 1 pipeline could slow, or even stop, due to crumbling infrastructure.
Europe’s Stoxx 600 was marked 0.1% higher in early Frankfurt trading ahead of the ECB rate decision, following on from a modest 0.08% decline for Asia’s region-wide MSCI ex-Japan index.
In the U.S., the Treasury bond yield curve remains deeply inverted, with 2-year notes climbing to 3.246% and 10-year notes trading at 3.055%, while oil prices extended declines following a bigger-than-expected build-up in gasoline supplies reported yesterday by the Energy Department.
WTI futures for September delivery, which are tightly linked to U.S. gas prices, were marked $4.44 lower at $95.44 per barrel, while AAA data noted pump prices fell for a 33rd consecutive day to $4.44 per gallon.
On Wall Street, futures tied to the S&P 500 are indicating a 7 point opening dip while those liked to the Dow Jones Industrial Average are priced for a 60 point move to the downside. Futures linked to the tech-focused Nasdaq are indicating a 2 point bump.
Tesla (TSLA) – Get Tesla Inc. Report shares jumped 3% in active pre-market trading, helping the Nasdaq to a modestly firmer open after the carmaker topped Wall Street’s second quarter earnings forecasts and reiterated its goal for full-year delivery growth despite input price pressures and narrowing margins.
United Airlines (UAL) – Get United Airlines Holdings Inc. Report shares slumped 6.55% after the carrier posted softer-than-expected second quarter earnings as surging staff and fuel costs offset a boom in post-pandemic travel demand.
American Airlines (AAL) – Get American Airlines Group Inc. Report was also on the move, falling 2.3% after modestly weaker-than-expected second quarter earnings and muted capacity plans as the industry grapples with surging fuel costs and staff shortages.
AT&T (T) – Get AT&T Inc. Report fell 2.34% after it posted stronger-than-expected second quarter earnings but lowered its full-year cash flow forecasts as it ramps-up investment in its expanding 5G network, potentially putting its dividend payout levels at risk.
Carnival Corp (CCL) – Get Carnival Corporation Report shares slumped lower in pre-market trading after the cruise line operator unveiled plans to raise around $1 billion through a discounted stock offering.
Ford Motor Co. (F) – Get Ford Motor Company Report shares edged higher in pre-market trading following a report from Bloomberg News that suggested the carmaker is preparing to cut up to 8,000 jobs over the coming weeks.
