US stock futures and Treasuries dropped as muted trading resumed after the Christmas holiday, with investors looking to initial jobless claims data and a government bond auction later on Thursday. At 8:00am, S&P futures fell 0.3%; the index closed 1.1% higher on Tuesday, extending this year’s advance to 27%, and on pace for the best full-year return this century. Nasdaq futures slipped 0.4% after adding 1.4% on Tuesday, as a bout of selling started after the Europe open. Most major markets in Europe are still shut for holidays. Treasuries extended their selloff, pushing 10Y yields to a fresh 6 month high of 4.63%, a level which will start denting the Christmas rally meltup. The dollar also gained as the Bloomberg Dollar Index hit a new two year high. The only even on today's calendar is jobless claims at 8:30am.
In premarket trading, cryptocurrency-tied stocks like MicroStrategy Inc. and Riot Platforms Inc. declined, tracking a drop in Bitcoin. Here are some other notable premarket movers:
With US stocks on pace for another blowout year, bulls are pinning their hopes on the “Santa Claus rally” in which stocks rise during the final five trading sessions of a year and the first two of the new one. Separately, with Trump’s inauguration slated for Jan. 20, investors are awaiting insights on his proposed policies, including tax cuts and tariffs which is set to keep the rally going. Driven by optimism about the strength of the US economy and developments in artificial intelligence, the S&P 500 is set for its largest jump relative to the rest of the world since 1997.
European markets were mostly closed while in Asia, the MSCI Asia Pacific Index climbed for a fourth day, the longest winning streak since September, led by Japan and Taiwan. Japanese shares also rose after central bank governor Kazuo Ueda on Wednesday avoided giving any clues about a possible interest-rate hike. Japanese retail shares also gained after the country agreed with China to introduce more measures to promote tourist visits. The two nations also agreed that Beijing’s top diplomat should visit Japan in 2025, adding to signs the two nations are repairing ties that have been strained in recent years. Shares of Chinese computing-equipment makers advanced after the nation said it planned to include the sector into the investment scope of local government special bonds. Kingsignal Technology surged as much as 20% as did Broadex Technologies.
The dollar was broadly steady against its Group-of-10 peers, while the yen extended its losses after BOJ head Ueda refused to offer any hawkish hints about an imminent rate hike. “Weakness in the yen on the back of recent Fed-BOJ policy divergence has offered some support for Japanese equities in today’s session, coupled with the year-end positive seasonality around the Santa Claus rally,” said Jun Rong Yeap, a market strategist at IG Asia Pte in Singapore.
In rates, treasuries are under pressure as US trading gets under way following Wednesday’s US holiday. 10-year yields climbed four basis points to 4.63% before the US auctions $44 billion of seven-year notes on Thursday. The year’s final coupon auction at 1pm New York time, a $44 billion 7-year note sale. Demand was firm for 2- and 5-year note auctions Monday and during Tuesday’s holiday-shortened session, halting a selloff in which 5- to 30-year yields reached highest levels in months.
In commodities, oil held gains after an advance before the Christmas break, with China’s stimulus measures and the outlook for US stockpiles in focus.
Looking at today's calendar, US economic data calendar includes only weekly jobless claims at 8:30am. The Fed speaker slate is blank for the rest of the week.
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