US stock futures rise and the dollar eases after Trump signals he may back piecemeal stimulus
- US futures rose, along with the decline in the dollar, after President Donald Trump signaled he may be open to piecemeal stimulus.
- Technology and industrial stocks gained, along with energy futures, as investor risk appetite improved.
- Treasury yields held steady ahead of weekly jobless claims.
US stock futures rose sharply on Thursday, pointing at an extension to the strongest daily rally in three months, after President Donald Trump signaled he is open to piecemeal stimulus, rather than a single package, fueling investor optimism that a deal may be soon in the offing.
Futures on the S&P 500, the Nasdaq 100 and the Dow Jones rose between 0.6-0.8%, lifted in part by a weaker dollar, which came under pressure from investors turning to more risk-linked assets, such as technology stocks, industrials and emerging-market currencies.
In a tweet on Wednesday, Trump urged Democrats and Republicans to collaborate to push for a $25 billion lifeline for the airline sector, after having left the door open the previous day to sending $1,200 payments to individuals. This sent the Dow Jones up by around 530 points in its largest one-day gain in 12 weeks.
"Once again it has been changing expectations of US stimulus that have driven markets, with Wednesday's rally coming off the back of a softened tone from the president that pointed towards the potential for a smaller, but perhaps more targeted, relief programme," IG Group analysts said in a morning note.
The dollar index held steady around 93.62, as losses in the US currency against the pound, which rose 0.4% were offset by gains in the Canadian dollar and the Japanese yen, which eased 0.1% against the greenback. The Korean won and the Mexican peso were the standout emerging-market gainers, up 0.4% and 0.3%, respectively.
European indices traded higher, following on from a broad-based rise on Asian markets overnight, that lifted the Nikkei by nearly 1%, and both the Taiwan weighted index and the S&P/ASX 20 by 1.1%.
Madrid's IBEX 35, sometimes viewed as being slightly higher risk than larger indices such as the FTSE 100 or the DAX, was the top performing benchmark in Europe, rising 1.4% on the day to outperform the Stoxx 600, which gained 0.6%. German mid-caps, which rose 1%, hit a one-month high.
The FTSE 100 was one of the few benchmarks in the red, down 0.1%, after budget airline EasyJet warned it faces its first ever annual loss this year, stripping 2% off the share price, making it one of the few travel stocks to fall in Europe.
Among the commodities complex, London gasoil futures — a proxy for demand for diesel, which broadly encompasses the likes of heating oil and jet fuel - rose 2.5%, while Brent and WTI crude futures gained around 1%, after a decline in US commercial inventories and as Hurricane Delta shuttered around 30% of production capacity.
Brent crude was last around $42.46 a barrel, while WTI was at $40.36 a barrel. Both contracts have gained around 4% in the last week. But, with cases of COVID-19 on the rise, the prospect for sustained gains across the energy complex appeared to be fairly dim, according to AxiTrader chief strategist Stephen Innes.
"Hints of any renewed downtrend in demand – practically driven by Covid concerns — continue to send fear across the markets," Innes said in a daily note.
Deutsche Bank analysts said in a note that cases of COVID-19 are now rising at their fastest rate of the pandemic at over 12,800 per day on average over the last seven days.
Gold rose 0.3% to around $1,895 an ounce, helped in part by a weaker dollar and steadier Treasury yields, but also as investors did some bargain-hunting after having driven the price to its lowest in nearly two weeks the previous days.
Minutes from the Federal Reserve's meeting in September showed policymakers were divided last month in how to implement the central bank's new approach to targeting inflation, having been unanimous the previous month.
On the data front, traders were waiting for weekly US jobless claims, which are expected to show continued claims remained stubbornly above 10 million in the week to September 26. The number of people that continue to claim unemployment benefit has more than halved since the highs seen in May.