Higher Open Expected For US Markets: Oil Price Slips

Higher open likely for the U.S. markets Wednesday after the U.S. stock index futures rallied on Wednesday morning.

The futures jumped, buoyed by Tuesday’s remarkable trading performance in which Dow Jones Industrial Average soared more than 500 points.

At 7:00 a.m. ET, Dow futures jumped 168 points, hinting a higher open of more than 170 points. Futures on the S&P 500 and Nasdaq were also high.

Asian stocks rally

Stocks in Asia rallied Wednesday on the footsteps of big gains in Wall Street.

Japan’s Nikkei 225 gained 1.80 percent and the Topix index also added 2.07 percent. South Korea’s Kospi rose 0.1 percent.

Mainland Chinese stocks were largely flat. The Shanghai composite was close to flat. But Hong Kong’s Hang Seng index jumped more than 0.2 percent. The ASX 200 of Australia also added 0.41 percent.

At the trade front, China’s Commerce Ministry gave some positive signals. The statement, “differences and frictions between the two sides” should be dealt with “through talks” was forward-looking.

On Wednesday, European stocks traded higher on cues from Wall Street. The pan-European Stoxx 600 was up 0.4 percent during the morning session.

Oil down

Oil prices slid on Wednesday after the U.S. inventories expanded. However, a larger price crash was capped by the recovery in equity markets over the hope that the U.S. Fed is going for a rate cut.

Brent futures fell 29 cents at $61.68 a barrel at 0853 GMT. The U.S. West Texas Intermediate crude was down 50 cents at $52.98 a barrel.

The U.S. crude inventories rose unexpectedly last week, according to the data by the American Petroleum Institute.

“The stock build does not help sentiment in the current market environment,” said a note by ING bank.

The oil prices had been weighed down by concerns about slowing global growth due to the U.S.-China trade war and President Donald Trump’s threats to impose tariffs on Mexican imports.

Gold up

Gold prices jumped to a three-month high on Wednesday, after the comments of U.S. Fed officials raised hopes that an interest rate cut is in the offing.

Comments of Fed Chair Jerome Powell that the central bank would act “as appropriate” in the face of trade war risks left the door ajar for a possible rate cut.

But the rate cut buzz hit dollar that fell to a multi-week low.

Spot gold jumped 0.7 percent to $1,333.90 per ounce at 0730 GMT. The U.S. gold futures also soared 0.8 percent to $1,339.60 an ounce.

Economic data on Tuesday also offered some rationale for a rate cut as it showed new orders for U.S.-made goods fell in April and shipments were down to two year-low.