➤ U.S. secretary of state in Riyadh amid tensions over missing journalist.
➤ Italian assets gain as cabinet approves 2019 budget.
➤ Sterling shrugs off Brexit woes, jumps on wage growth.
➤ Futures point to higher opening for S&P 500.
Oil futures eased as investors track developments in the investigation into missing journalist Jamal Khashoggi, while Wall Street looks set to open higher as quarterly corporate earnings pour in.
Brent crude oil dropped 0.88% to $80.07 per barrel on the ICE Futures Exchange as of 6:50 a.m. ET, as U.S. Secretary of State Mike Pompeo arrives in Saudi Arabia to discuss Khashoggi's disappearance with King Salman. The U.S. had threatened sanctions on the oil-rich Middle Eastern country if it is found to be connected to the journalist's disappearance.
The Saudi Tadawul All Share Index recovered earlier losses to inch 0.29% higher. Meanwhile, futures point to the S&P 500 and the Nasdaq 100 opening higher, with earnings reports from Johnson & Johnson, Netflix Inc., Morgan Stanley, Goldman Sachs Group Inc. and other corporate heavyweights in focus.
Asian and European stock markets delivered a mixed bag, with Japan's Nikkei 225 advancing 1.25%, the Shanghai SE Composite index shedding 0.85% and the Euro Stoxx 50 edging 0.30% higher. AB Volvo's shares plunged more than 5% in Stockholm after the Swedish truck maker warned that some of its vehicle engines could exceed emission limits for nitrogen oxides due to a premature degradation of a control component used in certain markets, including North America.
Italian assets outperformed, with the FTSE MIB index up 0.97% and yields on 10-year government bonds dropping 10 basis points to 3.45%, after the cabinet approved its 2019 budget, which targets a fiscal deficit of 2.4% of GDP, before sending it to the European Commission for approval.
"The Italian government are no doubt hoping that the EU Commission will blink when it comes to a possible confrontation and hope the markets do its job for them," wrote Michael Hewson of CMC Markets UK. "The EU will need to tread carefully given that the budget appears to be popular, and won't want to be seen to be heavy-handed, thus risking a backlash from its third-largest economy."
The FTSE 100 dipped 0.31% as sterling appreciated 0.53% against the dollar on the back of stronger-than-expected wage growth in Britain, shrugging off concerns that the country is getting increasingly likely to crash out of the European Union without a deal.
While a divorce agreement between the two sides is highly unlikely to be reached at tomorrow's summit of European leaders, "the market is nonetheless growing confident that the U.K. and EU will be able reach a last-minute deal in the not-too-distant future anyway, as this outcome is best for both parties," wrote Fawad Razaqzada, technical analyst at Forex.com.
"As long as the rift between the EU and the U.K. doesn't widen further, the downside risk to [the pound] therefore seems limited," according to Richard Falkenhäll, senior currency strategist at SEB.
The euro struggled for traction against the dollar, while the Japanese yen depreciated 0.23%.
Treasurys dipped, with 10-year yields adding more than 1 basis point to 3.171%, as investors await the minutes from the Federal Open Market Committee's latest meeting. Gold futures gained 0.21% to $1,232.90 per ounce.
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The day ahead:
9:15 a.m. ET — U.S. industrial production (Econoday consensus: 0.2% monthly)
10 a.m. ET — U.S. housing market index (Econoday consensus: 67)
10 a.m. ET — U.S. JOLTS (Econoday consensus: job openings 6.905 million)
4 p.m. ET — U.S. Treasury international capital