Stock futures edge higher as retail earnings push consumer confidence

FILE PHOTO: A trader works on the floor at the New York Stock Exchange (NYSE) in New York, U.S., August 14, 2019. REUTERS/Eduardo Munoz

NEW YORK: U.S. stock index futures stabilized on Thursday as strong results from retailers bolstered confidence in consumer demand, while investors look ahead to Fed Chief Jerome Powell’s speech for more clues on future interest rate moves.

Upscale retailer Nordstrom Inc (JWN.N) jumped about 7% in premarket trading as it joined Target Corp (TGT.N) and Lowe’s Cos Inc (LOW.N) in delivering a quarterly profit beat.

“There is an ongoing feeling that U.S. consumer names are robust and that’s important to an economy that is slowing,” said Art Hogan, chief market strategist at National Securities in New York.

The release of the minutes from the U.S. central bank’s meeting on July 30-31 offered little clarity on Fed’s next move. The policymakers were deeply divided over their quarter-point cut in rates but united in wanting to signal the move was not on a preset path to further cuts.

While traders are sticking to bets that the Fed will cut rates again in September, Powell’s speech at an annual gathering in Jackson Hole on Friday may prove crucial to short-term sentiment.

President Donald Trump continues to press the Fed publicly to reduce rates, but many analysts say the U.S. economy is far further away from recession than some of its European rivals or than the bond market at times in recent months has suggested.

“The propensity for (Powell) to disappoint investors is out there but he will likely use Jackson Hole to suggest that the Fed is ready to cut (rates),” Hogan said.

At 8:40 a.m. ET, Dow e-minis 1YMcv1 were up 36 points, or 0.14%. S&P 500 e-minis EScv1 were up 3.75 points, or 0.13% and Nasdaq 100 e-minis NQcv1 were up 5.25 points, or 0.07%.

Despite a staging a comeback from last week’s bruising selloff, markets are still on course to end the month lower, mainly due to concerns over the U.S.-China trade war and its impact on growth.

The ongoing tariff war and fears of recession have prompted China and Germany to consider stimulus, with minutes from European Central Bank’s last policy meeting signaling more easing as soon as September.

After better-than-expected purchasing manager surveys (PMI) in Europe on Thursday, investors will focus on U.S. PMI data, due at 9:45 a.m. ET.

Tesla (TSLA.O) rose 2.7% after a report said Volkswagen (VOWG_p.DE) Chief Executive Officer Herbert Diess is interested in acquiring a stake in the electric car-maker.

Meanwhile, the British pound jumped more than half a cent on Thursday to nearly a one-month high after German Chancellor Angela Merkel said a solution to the Irish border issue could be found before the Oct. 31 deadline for Britain to leave the European Union.

Sterling, trading around $1.2160 earlier, rocketed to as high as $1.2265, before settling around $1.2217, up 0.8% on the day.

Against the euro, sterling rose as high as 90.415 pence , a more than 1% rise on the day and its highest since July 29.

The euro zone equity benchmark swung into positive territory and hit the day’s high after the comments, while London’s exporter-heavy FTSE 100 fell as sterling came under pressure. At 1305 GMT, the euro-zone index was up 0.2% while FTSE was 0.8% lower.

The pound has fallen heavily in recent weeks on fears British Prime Minister Boris Johnson will take Britain out of the EU without a transition deal.

However, with investors having bet heavily against the currency, any sign of a breakthrough in Britain’s efforts to convince the EU to renegotiate the deal is likely to send the pound jumping, analysts and traders say.

“We are not really any closer to finding a solution. [French leader Emmanuel] Macron has met Johnson with scepticism. The markets are biased towards the optimistic view because everyone still thinks that given the negative consequences of no-deal Brexit for both sides a solution will be found,” said Esther Maria Reichelt, an FX strategist at Commerzbank.