Stock Market Update: Dow Futures Higher As Biden-Xi Call Boosts Sentiment

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The Friday Market Minute

  • Global stocks get a boost from the first Biden/Xi phone call in seven months as the two world leaders hold a 90 minute ‘broad, strategic’ discussion.
  • UK July GDP limps to its slowest pace since the January lockdowns as COVID cases hit the world’s 5th largest economy.
  • Toyota cuts 2022 production forecasts amid COVID-linked factory shutdowns in Asia and the ongoing shortage in global semiconductors.
  • Oil prices power higher amid the lingering impact of Hurricane Ida on Gulf production and a a bullish read from the Biden/Xi phone call. 
  • U.S. equity futures suggest a firmer open on Wall Street ahead of second quarter earnings from Kroger as well as factory gate inflation data at 8:30 am Eastern time.

Wall Street futures traded higher Friday, following on from solid gains in Asia and Europe, as news of a ninety-minute call between President Joe Biden and China’s Xi Jinping provided a late-week boost to market sentiment.

The call, the second between the two world leaders — but the first in seven months — was described by the White House as a ‘broad, strategic’ discussion aimed at bridging difference on climate, trade and regional security between the world’s two biggest economies.

Asia shares got a boost from news of the talks, with the positive sentiment flowing through into a European session that was still navigating yesterday’s tapering decision from the ECB and news showing that the ongoing spread of Delta variant coronavirus infections lead to the slowest monthly economic growth in the UK since the January lockdowns.

The COVID hit was also felt in Asia, where Toyota Motor Co. TM, the world’s biggest carmaker, trimmed its 2022 production forecast by 300,000 vehicles owing to both the ongoing shortage in chip supplies and pandemic-linked factory closures in Vietnam and Malaysia. 

Similar concerns have crept into U.S. forecasts, as well, with the Federal Reserve’s August ‘Beige Book’ tallying economic activity citing the impact of COVID at least 54 times, up from just 9 in the month of July.

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On Wall Street, however, stock futures suggest solid opening bell gains on the final trading day of the week, with contracts tied to the Dow Jones Industrial Average indicating a 170 point boost and those linked to the S&P 500 priced for an 18 point advance.

Nasdaq Composite futures are set for a more modest 65 point gain, but pre-market advances for big tech names such as Apple  (AAPL) – Get Apple Inc. (AAPL) Report and Tesla  (TSLA) – Get Tesla Inc Report suggest stronger moves as the session advances, especially with benchmark 10-year note yields easing to 1.323%.

In terms of individual stocks, Affirm Holdings  (AFRM) – Get Affirm Holdings Report was the standout pre-market gainer, with shares in the ‘buy now, pay later’ payments network soaring 23.5% after better-than-expected fourth quarter revenues and a robust 2022 outlook.

Freeport-McMoran  (FCX) – Get Freeport-McMoRan, Inc. (FCX) Report was also active, rising 0.83% to $35.10 each as elevated copper prices offset a downgrade on the stock published Friday by Credit Suisse.

Oil prices were also active in overnight trading, with WTI futures for October delivery rising $1.22 to $69.36 per barrel, thanks in part to both a bullish read from the Biden/Xi phone call and the ongoing impact of Hurricane on production facilities in the Gulf of Mexico.

In overseas markets, European stocks booked a solid mid-morning gain of 0.35 for the Stoxx 600 as Thursday’s ECB decision on tapering, which pared the pace of its monthly bond purchases to €60 billion from €80 billion, eased concerns for a sharper pullback in central bank stimulus. 

In Asia, the Biden-Xi call gave China stocks a boost, helping the MSCI ex-Japan index rise 1.03% into the close of trading, while the Nikkei 225 in Tokyo ended the Friday session 1.25% higher at 30,381.84 points.

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