Thursday May 17th

17-05-2018

US stocks set for a slightly lower open as Treasury yields climb

U.S. stock index futures futures pointed to slightly lower open Thursday, as investors monitor rising bond yields and new earnings. At around 8:30 a.m. ET, Dow Jones industrial average futures fell 30 points, indicating a decline of 34.93 points at the open. Nasdaq 100 and S&P 500 futures also pointed to a lower start for their respective markets. The moves in premarket trade follow surging bond yields in the previous session. A slew of economic data pushed the U.S. 10-year yield through to 3.1 percent — its highest since July 2011. Higher yields could be detrimental to U.S. stocks as they can curb investment. However, U.S. stocks finished higher on Wednesday driven by retail shares. Macy's rose 10.8 percent on stronger-than-expected quarterly results. The Dow Jones industrial average closed 62.53 points higher. Dow-component Walmart reported better-than-expected quarterly earnings as U.S. online sales grew by 33 percent in the previous quarter. In terms of data, weekly jobless claims totaled 222,000, slightly more than the expected 215,000. Asian stocks closed narrowly mixed on Thursday as the yield on the U.S. 10-year Treasury stayed above 3 percent. Investors also kept an eye on the second round of U.S.-China trade talks. The Nikkei 225 rose 0.53 percent, or 121.14 points, to close at 22,838.37 in Tokyo, shrugging off weak core machinery orders — a leading indicator for capital expenditure — for the month of March. The broader Topix was higher by 0.45 percent, with its oil and insurance subindexes among the best-performing sectors. Over in Seoul, the Kospi finished the day down 0.46 percent at 2,448.45. Hong Kong's Hang Seng Index shed 0.42 percent by 3:10 p.m. On the mainland, the Shanghai composite edged down by 0.48 percent to 3,154.24 and the Shenzhen composite eased 0.52 percent to end at 1,822.70. Oil prices hit $80 a barrel on Thursday for the first time since November 2014 on concerns Iranian exports could fall, reducing supply in an already tightening market. Brent crude futures briefly hit $80 and were up 69 cents at $79.97 per barrel by 7;55 a.m. ET. U.S. West Texas Intermediate (WTI) crude futures were up 64 cents at $72.13 a barrel, also their highest since November 2014. Gold slid to a fresh low for the year on Thursday as another rise in U.S. bond yields and concerns over political risk in Italy held the dollar index near its 2018 peak. The precious metal has fallen more than 2 percent this week on gains in the U.S. currency and a rise in U.S. 10-year Treasury yields to seven-year highs. Higher yields increase the opportunity cost of holding non-yielding assets such as bullion. Spot gold was down 0.19 percent at $1,287.76 an ounce by 8:20 a.m. ET. U.S. gold futures for June delivery were down 0.33 percent at $1,287.20. The dollar has climbed nearly 4 percent this quarter on expectations that the Federal Reserve will lift U.S. interest rates further this year to curb inflation, at a time when other central banks are still keeping monetary policy loose.