U.S. Stocks Set for Small Opening Rise

By David Hodari

U.S. stocks were set to echo mild gains elsewhere on Wednesday, as markets absorbed a slew of financial sector corporate earnings.

In the U.S., futures pointed to gains of 0.2% for the S&P 500 and the Dow Jones Industrial Average. Investors were closely focused on financial-sector earnings, with Bank of America rising 3.9% in premarket trade after it posted a sharp increase in profits. BlackRock shares were down 0.8% before the market open after the company's own release, while Goldman Sachs was also expected to put out results later in the day.

Tech stocks were on course to open slightly lower after leading Wall Street higher Tuesday, following the People's Bank of China's move to reassure markets of its intention to support waning economic growth in the world's second-largest economy.

The Stoxx Europe 600 was up 0.2% with mild, broad-based gains in early afternoon trading. The index's banking sector climbed 0.9% after its Italian constituents came under pressure Tuesday, following reports that the European Central Bank wants them to clean up their bad loans more effectively.

British assets gave a tepid reaction to the U.K. parliament's overwhelming rejection of Prime Minister Theresa May's proposed Brexit deal late Tuesday. The defeat was the largest suffered by a sitting British government in modern times.

The FTSE 100 fell 0.5%, underperforming other European benchmarks, as the British pound gave up its initial gains to move down 0.1% against the U.S. dollar and down 0.3% against the euro.

Still, market participants saw a lower likelihood of the country leaving the European Union without a deal.

"The probability of a softer Brexit or remaining in the EU has gone up more than anything else as a result of the vote in parliament last night, and that offsets persistent uncertainty," said John Wraith, head of U.K. rates strategy and economics at UBS.

The yield on 10-year U.K. government debt rose to 1.319% from 1.259% late Tuesday. Yields rise as prices fall.

Gentle gains in Europe followed mixed trading in Asia. Japan's Nikkei benchmark ticked 0.6% lower after hitting a four-week high Tuesday, while the Shanghai Composite Index was flat and the Shenzhen A-Share fell 0.1%. Hong Kong's Hang Seng gained 0.3%.

A string of gloomy economic figures out of China in recent weeks has concerned investors about the state of broader global growth, although reports that the Chinese central bank had injected liquidity into the country's banking system helped soothe those jitters Wednesday.

Markets have recently focused on those growth concerns, as well as precarious trade negotiations, but a positive start to fourth-quarter corporate earnings season has also provided a balm to markets.

In the current earnings season, "we expect some growth, and if the current geopolitical issues abate, we'll see the move back to fundamentals that investors want," said Christian Nolting, chief investment officer at Deutsche Bank Wealth Management.

Elsewhere, the U.S. partial government shutdown -- the longest in history -- continued with no end in sight. President Trump has no meetings scheduled with House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer for this week, and the White House has struggled to convince individual Democrats to back the president's $5.7 billion request for wall construction and security funds on the U.S.-Mexico border.

Market participants will also continue to watch British politics, with a no-confidence vote against Prime Minister Theresa May planned. Mrs. May is widely expected to survive the vote, which is due to take place later Wednesday.

That growing consensus was a factor behind the uptick in the pound, according to Stephen Gallo, European head of FX strategy at BMO Financial Group.

"People could see the situation moving to a confidence motion that they think the prime minister will win," Mr. Gallo said.

In commodities, Brent crude oil was down 0.4% at $60.38 a barrel, while gold climbed 0.1% to $1,289.10 a troy ounce.

Write to David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

January 16, 2019 07:57 ET (12:57 GMT)

Grafico Indice FTSE 100

Da Mar 2024 a Apr 2024