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US stock futures rise, oil retreats as Middle East concerns ease


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US stock futures rise, oil retreats as Middle East concerns ease

➤ US-Iran concerns cool down.

➤ Global stocks rebound as oil, gold retreat.

➤ Chinese yuan touches 5-month high.

➤ US trade, non-manufacturing data in focus.

Wall Street looks set to open higher while oil prices fell amid waning concerns about the rift between the U.S. and Iran.

Iran vowed to retaliate against the U.S. for the airstrike that killed one of its leading commanders Jan. 2, stoking fears of a full-fledged military conflict between the two countries, but Tehran has yet to take any armed action. However, "we can't let complacency overtake cautiousness as the risk is far from depleting," wrote Margaret Yan, markets analyst at CMC Markets Singapore.

S&P Global Ratings and Moody's reaffirmed their base case that the U.S. and Iran will not engage in direct military conflict, but warned that any escalation would be highly disruptive for Gulf countries and have an impact on the world economy.

Brent crude oil lost 0.6% to $68.50 per barrel on the ICE Futures Exchange as of 6:30 a.m. ET, while the West Texas Intermediate fell 0.5% to $62.94 per barrel on the New York Mercantile Exchange. Gold also declined before paring losses to trade flat at $1,568.30 per ounce.

Futures for the S&P 500 and Nasdaq 100 were up by 0.1% and 0.3%, respectively, tracking gains in global stock markets.

In Europe, the U.K.'s FTSE 100 index edged 0.2% higher, Germany's DAX gained 1.1% and France's CAC 40 increased 0.5%. The Stoxx Europe 600 rose 0.6%.

Japan's Nikkei 225 index added 1.6%, while the Shanghai SE Composite index gained 0.7% and Hong Kong's Hang Seng rose 0.3%. China reportedly does not plan on raising its import quotas for wheat, rice and corn to contribute to its commitment of increasing imports of agricultural goods from the U.S., in a bid to protect domestic producers.

In the foreign exchange market, sterling depreciated 0.1% to $1.316 and the euro fell 0.2% to $1.118, while the yen was little changed against the dollar. The yuan appreciated 0.5% to a five-month high of 6.941 per dollar.

The U.S. Dollar Index, which measures the currency against a basket of developed-market peers, ticked up 0.1% to 96.75 ahead of U.S. trade and non-manufacturing data. Overnight, a private-sector survey showed that business activity in the U.S. expanded at its fastest pace in eight months during December 2019 amid stronger growth in the services sector.

Among bonds, Treasurys barely moved as the 10-year yield stayed at 1.81%. German bunds with the same maturity were also unchanged, with the yield flat at negative 0.28%.

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US bank bond portfolios should close 2019 firmly in the black

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The day ahead:

8:30 a.m. ET — U.S. international trade (Econoday consensus: $43.9 billion deficit)

8:30 a.m. ET — Canada merchandise trade (Econoday consensus: C$1.1 billion deficit)

8:55 a.m. ET — U.S. redbook

10 a.m. ET — Canada Ivey purchasing managers' index

10 a.m. ET — U.S. factory orders (Econoday consensus: -0.7% monthly)

10 a.m. ET — U.S. ISM nonmanufacturing index (Econoday consensus: 54.5)