➤ Fed Beige Book points to concerns on U.S. outlook.
➤ European, Asian equities dip; Wall Street set for lower open.
➤ Sterling steadies as investors weigh Brexit path.
➤ Oil drops; gold edges higher.
U.S. stocks are poised to open in the red this morning, following declines in their Asian and European peers, as global economic growth and trade concerns returned to the spotlight while markets await the next developments in the Brexit saga.
The Nasdaq Composite index extended gains overnight to close the session 0.15% higher, while the financials sub-sector drove a 0.22% advance in the S&P 500. Shares in Goldman Sachs Group Inc. and Bank of America Corp. surged 9.54% and 7.16%, respectively, after both banks reported better-than-expected earnings for the fourth quarter of 2018.
But futures point to a lower open on Wall Street this morning amid lingering concerns about the U.S. economic outlook and uncertainty regarding trade relations with China.
In its latest Beige Book report, the U.S. Federal Reserve found that many of the central bank's regional districts heard increased concerns from their business contacts about the outlook on the U.S. economy. "Outlooks generally remained positive, but many districts reported that contacts had become less optimistic in response to increased financial market volatility, rising short-term interest rates, falling energy prices, and elevated trade and political uncertainty," the report said.
The Beige Book was released hours before China confirmed that Vice Premier Liu He will head to Washington at the end of the month to continue trade talks at the invitation of U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
The confirmation appeared to offer little support to Asian markets, with the Shanghai SE Composite index slipping 0.42% and Hong Kong's Hang Seng losing 0.54%, amid a report that Huawei Technologies Co. Ltd. is facing a criminal investigation from U.S. federal prosecutors for stealing trade secrets from U.S. businesses. Japan's Nikkei 225 dipped 0.20%.
European equities followed their Asian peers in the red, with Germany's DAX index dropping 0.29% and France's CAC 40 declining 0.41% as of 6:30 a.m. ET. Société Générale SA shares fell more than 4% after the company warned that it expects to incur a €240 million exceptional charge for the fourth quarter of 2018, while STMicroelectronics NV dropped nearly 3% after peer Taiwan Semiconductor Manufacturing Co. Ltd. projected lower revenues in the first quarter amid an "overall weakening of the macroeconomic outlook."
Meanwhile, the FTSE 100 index continued to dip from yesterday and was down 0.41% as the Brexit saga continues.
U.K. Prime Minister Theresa May's government won a no-confidence motion in a 325-306 vote in Parliament yesterday, paving the way for cross-party talks as the Jan. 21 deadline for her alternative Brexit plan looms. Andrea Leadsom, leader of the House of Commons, reportedly said lawmakers will be able to vote on May's so-called Brexit Plan B on Jan. 29.
The pound was broadly unchanged against the dollar at just below $1.29 and the euro at around €1.13.
"The market is looking for the removal of the no-deal Brexit risk or even better no Brexit," wrote Fiona Cincotta, analyst at Forex.com, in a Jan. 16 note. "Any steps however large or small taking the U.K. away from a no-deal Brexit will boost the pound."
The euro was little changed against the dollar, while the Japanese yen inched up 0.26%. Gold ticked up 0.05% to $1,294.40 per ounce, while Brent crude oil fell 1.08% to $60.66 per barrel on the ICE Futures Exchange.
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The day ahead:
8:30 a.m. ET – U.S jobless claims (Econoday consensus: 221,000)
8:30 a.m. ET – U.S. Philadelphia Fed business outlook survey (Econoday consensus:10.0)
10:30 a.m. ET – EIA Natural Gas Report
10:45 a.m. ET – Fed's Randal Quarles speaks
4:30 p.m. ET – Fed balance sheet
4:30 p.m. ET – U.S. money supply
6:30 p.m. ET – Japan consumer price index