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26.05.2017

U.S. stock futures point to pull back from record highs, GDP on tap

Wall Street futures pointed to a slightly lower open after the S&P 500 and Nasdaq Composite closed at record highs a day earlier, while investors looked ahead to a long holiday weekend and waited for economic reports set for release ahead of the open.

The blue-chip Dow futures slipped 19 points, or 0.09%, at 6:57AM ET (10:57GMT), the S&P 500 futures gave up 3 points, or 0.11%, while the tech-heavy Nasdaq 100 futures dipped 4 points, or 0.07%.

Before traders head out for a three-day weekend with Wall Street closed next Monday for Memorial Day, futures slipped as stocks faced record highs and market players waited for a revised reading of first quarter gross domestic product (GDP), along with a gauge for factory activity at the start of the second quarter.

The U.S. is to release revised figures on first-quarter economic growth at 12:30GMT Friday. The data is expected to show that the economy grew at a 0.9% annual rate in the first three months of the year, upwardly revised from a preliminary estimate of 0.7%.

However, markets may well focus more on the release of durable goods orders for April. The headline number is expected to decline by 1.2%, while the core reading is expected to rise 0.5%.

Also on tap, the University of Michigan will provide an updated version of its May consumer sentiment index with a small downward revision to 97.5 forecast.

While waiting for the data, the dollar turned lower against other major currencies on Friday.

With no Federal Reserve (Fed) officials on tap for Friday’s session, St. Louis Fed president James Bullard said after the previous U.S. market close that the trend in inflation since 2012 has been “worrisome”.

According to Investing.com's Fed Rate Monitor Tool, markets were currently pricing in the odds a June rate hike at around 78%, but put the possibility of a second increase by the end of the year at only 33%.

Market players may also keep an eye on U.S. President Donald Trump’s meeting with the group of 7.

Trump tweeted early Friday that his first official trip outside of the U.S. had been “successful” so far.

“We made and saved the USA many billions of dollars and millions of jobs,” he proclaimed.

He further promised to “engage G7 leaders on many issues including economic growth, terrorism, and security.”
 

In a light day for company news, Big Lots reported earnings-per-share of $1.15, beating forecasts by $0.16, although revenue came in under expectations.

Meanwhile, battered oil prices recovered some ground on Friday after crashing nearly 5% the prior session as the decision by major oil producers to extend their production cuts nine months without an increase in levels disappointed markets.

U.S. crude oil futures gained 0.29% to $49.04 at 10:57GMT, while Brent oil traded up 0.39% to $51.66.

Investors also looked ahead to latest weekly data from Baker Hughes on U.S. drilling activity. Last week, the energy services provider said that the U.S. added rigs for the 18th week in a row, increasing by 8 to 720 and extending an 11-month drilling recovery to the highest level since April 2015.

Elsewhere, sterling was under selling pressure on Friday as a YouGov poll showed that the Conservative Party’s lead over the Labour Party in the June 8 snap elections narrowed to just 5 points. Concern over a hung Parliament, took cable to a two-week low on Friday, while the pound also hit a two-month low against the euro.

The drop is sterling allowed London's FTSE 100 to outperform other European indices, that were broadly lower, as British exporters benefit when bringing profit back home.

Earlier, Asian shares pulled back from two-year highs with China's Shanghai Compositeending near the unchanged mark. Japan's Nikkei closed down 0.61% as core inflation came in under expectations in April and the dollar weakened against the yen.

Patrick Shmidt analyst Vertical Markets


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