The Friday Market Minute
- Global stocks gain following stronger-than-expected industrial data from China, although concern over rising tensions between Washington and Beijing kept markets in check.
- China’s April factory output rose 3.9%, more than double Street forecasts, adding to recent data of a slow but steady turnaround in the world’s second-largest economy.
- German GDP contracts 2.2% in the first quarter, the biggest fall in more than a decade, as lockdowns in Europe’s biggest economy kicked-in.
- Oil prices rise to one-month highs after the surge in China factory output and this week’s surprise decline in domestic crude stocks as well as the IEA’s forecasts of a modest second half recovery in global demand.
- U.S. equity futures suggest a tepid open on Wall Street ahead of a busy slate of economic data, including retail sales at 8:30 am, industrial output at 9:15 am and the University of Michigan consumer sentiment reading at 10:00 am Eastern time.
U.S. equity futures edged higher Friday, while oil prices surged and the dollar eased, following a stronger-than-expected reading for China’s factory output that suggests a slow, but noted, recovery in the world’s second-largest economy.
China’s industrial output leaped by 3.9% last month, official data Friday indicated, a figure that was more than double Street forecasts and adds to recent readings that suggest the country’s re-opening momentum is beginning to gain traction.
The surge offset the weakest quarter-on-quarter contraction for the German economy in more than a decade, which shrank 2.2% over the first three months of the year, and provided early support for stocks on the final trading day of a volatile week that saw the Dow Jones Industrial Average notched an 800 point rally last night to close firmly in the green.
Friday’s action is likely to be a bit more muted, however, as traders await a grisly reading for April retail sales data in the United States and fret over the fate of U.S.-China relations amid rising tensions over Beijing’s handling of the coronavirus outbreak.
Industrial production data follows at 9:15 am Eastern time, with the University of Michigan’s consumer sentiment reading set for 10:00 am Eastern time.
Ahead of this heavy slate of economic releases, futures contracts tied to the Dow Jones Industrial Average suggest a 65 point gain for the 30-stock average, while those linked to the S&P 500 are indicating a 7 point bump to the upside.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.26% lower at 100.205 while benchmark 10-year Treasury note yields were last seen at 0.0619% in early European trading.
Germany’s GDP contraction, while largely in-line with forecasts, capped gains for European stocks. although China’s factory output surge boosted miners and chipmakers to lead the Stoxx 600 benchmark into a 0.95% gain by mid-morning trade.
Britain’s FTSE 100, meanwhile, leaped 1.1% as energy stocks gained alongside oil prices, which were boosted by hopes of renewed demand from China factories, and an 8.2% gain for BT shares following a report that the struggling telcom is ready to sell a major stake in its Openreach business division.
Global oil prices extended their recent rally, lifting U.S. crude to a one-month high, following the better-than-expected China factory data today and the Energy Department’s first signal of a decline in domestic crude stocks in at least 15 weeks.
WTI contracts for June delivery, which expire next week, were marked 91 cents higher at $28.47 while Brent futures for July delivery, which benchmark around 60% of global crude purchases, were marked $1.11 higher at $32.33 per barrel.
Overnight in Asia, the follow-on from Wall Street’s 11th hour rally boosted Japan’s Nikkei 225, which closed 0.62% higher at 20,037.47 points, while the region-wide MSCI ex-Japan benchmark was last seen 0.2% higher on the strength of gains in Australia and South Korea.
