6 Months : From Apr 2019 to Oct 2019
By Nathan Allen
-- S&P 500, Dow futures rise
-- European stocks largely flat after gains in Asia
-- Oil rises as Iran tensions flare
Stocks treaded water Thursday after Federal Reserve Chairman Jerome Powell hinted at a possible interest-rate cut in July to support the U.S. economy as global growth slows.
Indexes across Europe were mixed, after the S&P 500 hit 3000 for the first time Wednesday and the Nasdaq Composite closed at a record high. The pan-continental Stoxx Europe 600 was up 0.2%.
"There's a lot of green this morning but no euphoria," said Vincent Juvyns, global market strategist at JPM Asset Management. "After double-digit increases this year, European markets are perhaps feeling some vertigo."
In the U.S., futures on the S&P 500 and the Dow Jones Industrial Average were trading 0.2% higher. Futures don't necessarily predict moves after the market open.
Three Iranian vessels tried to block a BP-run tanker from passing through the Strait of Hormuz on Wednesday but were turned away by a British warship, exacerbating tensions in the region and adding to oil-supply concerns.
Global oil benchmark Brent crude rose 0.5% to $67.35 after surging to a seven-week high Wednesday.
In the U.K., the Bank of England warned that foreign investment into commercial real estate and leveraged loans fell sharply in the first quarter, as the perceived risk of a no-deal Brexit has risen. Lower investor appetite for U.K. assets risks pushing up interest rates and slowing the economy, the bank said.
Still, Gov. Mark Carney said the U.K.'s banking system was sufficiently resilient to withstand a disorderly Brexit and the economic fallout of rising trade tensions.
The pound gained around 0.4% against the dollar, while the FTSE 100 equity index was flat.
Reckitt Benckiser Group PLC was among the U.K.'s biggest gainers after the consumer-goods company agreed to pay $1.4 billion to resolve a U.S. federal investigation into sales and marketing of Suboxone Film, an opioid-addiction treatment.
Meanwhile, shares of Germany's Deutsche Bank AG fell after The Wall Street Journal reported the U.S. Justice Department was investigating whether the lender breached anticorruption laws in its dealings with Malaysian fund 1MDB.
Asian markets were mostly higher, with Korea's Kospi and Hong Kong's Hang Seng leading the gains.
The European Central Bank will publish its monetary-policy meeting report Thursday. Analysts will look for any insights into whether the ECB will cut rates at its July meeting.
"While we expect a change of forward guidance this month, we expect the rate cut to be confirmed in September," Daiwa Capital Markets analysts said in a note to clients.
The yield on 10-year U.S. Treasurys was nearly flat at 2.064% Thursday, slightly up from 2.061% Wednesday. Bond prices and yields move in opposite directions.
The WSJ Dollar Index, which measures the currency against a basket of its peers, dropped 0.2%.
U.S. stocks jumped and the dollar fell Wednesday after Mr. Powell said in congressional testimony that the economic outlook hadn't improved in recent weeks and warned that weak inflation could be more persistent than expected, setting the stage for a July rate cut.
Equity markets had faltered in recent sessions amid concerns that investors were overestimating the likelihood of a rate cut. Mr. Powell's dovish comments and minutes from the Fed's June policy meeting reassured traders that further easing is the most likely course of action.
Mr. Powell is due to speak later in front of the Senate Banking Committee, though analysts don't expect him to provide much new information. U.S. consumer inflation data will be in focus, as weak inflation would support the case for further monetary easing.
"Powell needs a low inflation number to bolster the rate-cut case. If it proves to be just like last week's employment read and also comes in strong, then perhaps we've all been overeager for a cut," said Mike Loewengart, head of investment strategy at E*Trade.
(END) Dow Jones Newswires
July 11, 2019 07:39 ET (11:39 GMT)
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