➤ Wall Street set for weak open following yesterday's rally.
➤ Japanese equities gain, European stocks drop on return from holiday.
➤ Chinese shares fall as economic concerns, trade woes linger.
➤ Brent crude oil rally fades; gold edges higher.
Wall Street is poised to open in the red after sharp gains the previous day, while European and Asian equities were mixed as investors weighed progress in trade talks between the U.S. and China and amid political uncertainty in Washington.
Following recent losses, the S&P 500 index returned from Christmas break with a 4.96% surge, led by gains in the consumer discretionary sector. A Mastercard Inc. report showed that holiday sales grew 5.1% in the U.S., logging the strongest growth in six years.
The tech-heavy Nasdaq Composite index also bounced back, posting a 5.84% gain at market close, while the Dow Jones Industrial Average rose 4.98%. The rebound in U.S. stocks came as White House economic adviser Kevin Hassett told the Wall Street Journal that Federal Reserve Chairman Jerome Powell's job was "100% safe" and that President Donald Trump has no intention of firing him amid criticism of the central bank for hiking interest rates.
Japanese stocks continued to advance on cue from Wall Street's gains, with the Nikkei 225 index closing 3.88% higher. Chinese markets bucked the trend, with the Shanghai SE Composite index and Hong Kong's Hang Seng down 0.61% and 0.67%, respectively, amid trade developments between Beijing and Washington and further signs of a slowing domestic economy.
The world's two biggest economies intend to hold face-to-face trade talks in January 2019 while they continue to hold negotiations by phone, Chinese commerce ministry spokesman Gao Feng reportedly said earlier today, following reports that U.S. officials are due to meet their Chinese counterparts in the week of Jan. 7, 2019, to discuss trade.
Meanwhile, Trump is reportedly eyeing a potential executive order that would bar U.S. companies from using telecommunications equipment made by Huawei Technologies Co. Ltd. and ZTE Corp. Shares in ZTE dropped 3.44% in Hong Kong, while China Petroleum & Chemical Corp., or Sinopec, plunged 6.75% in Shanghai and 4.68% in Hong Kong on the heels of reports that it suspended officials at a subsidiary amid trading losses.
European stocks sank on their return from the holiday break, with Germany's DAX down 1.66% as of 6:30 a.m. ET, the FTSE 100 index shedding 0.89% and France's CAC 40 index down 0.03%. The euro gained 0.46% against the dollar, while sterling edged 0.02% higher.
In the bonds market, yields on 10-year Treasurys fell 3 basis points to 2.77%, while those on German Bunds dropped 1 basis point to 0.24%.
Among commodities, Brent crude oil resumed its decline after recovering to top $54 per barrel yesterday, dropping 1.58% to $53.61 per barrel on the ICE Futures Exchange. Gold rose 0.13% to $1,274.70 per ounce.
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The day ahead:
8:30 a.m. ET – U.S. jobless claims (Econoday consensus: 217,000)
9 a.m. ET – U.S. Federal Housing Finance Agency house price index (Econoday consensus: 0.2% month over month)
10 a.m. ET – U.S. consumer confidence (Econoday consensus: 134.0)
3 p.m. ET – U.S. farm prices
4:30 p.m. ET – U.S. Fed balance sheet
4:30 p.m. ET – U.S. money supply
6:30 p.m. ET – Japan unemployment rate (Econoday consensus: 2.4%)
6:50 p.m. ET – Japan industrial production (Econoday consensus: -1.9% month over month)
6:50 p.m. ET – Japan retail sales (Econoday consensus: 2.2%)