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Uncertainty May Keep Traders On The Sidelines

(RTTNews) - The major U.S. index futures are pointing to a roughly flat opening on Thursday following the volatility seen over the past few sessions.

Lingering uncertainty may lead to choppy trading on Wall Street as traders weigh concerns about the economic outlook against reports of progress in U.S.-China trade talks.

A senior U.S. administration official told Reuters U.S. and Chinese negotiators have made progress on the details of the written agreements to address U.S. concerns.

"If you looked at the texts a month ago compared to today, we have moved forward in all areas," the official said but noted, "We aren't yet where we want to be."

The report comes as U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin arrive in Beijing for a new round of high-level talks with Chinese officials.

Optimism about the U.S.-China trade talks may be offset by a report from the Commerce Department showing U.S. economic growth slowed by more than previously estimated in the fourth quarter.

Stocks fluctuated over the course of the trading session on Wednesday before ending the day mostly lower. The choppy trading on the day partly reflected the volatility shown by the markets over the past several sessions.

The major averages eventually closed in negative territory but well off their worst levels of the day. The Dow edged down 32.14 points or 0.1 percent to 25,625.59, the Nasdaq slid 48.15 points or 0.6 percent to 7,643.38 and the S&P 500 fell 13.09 points or 0.5 percent to 2,805.37.

The lower close on Wall Street came amid a notable drop by bond yields, which extended the downward trend seen over the past few sessions. The yield on the benchmark ten-year note ended the day at its lowest closing level since December of 2017.

Bond yields have moved to the downside amid concerns about the economic outlook, with an inversion of the yield curve leading to worries about a potential recession.

Traders were also reacting to a report from the Commerce Department showing the U.S. trade deficit narrowed much more than expected in January due to a steep drop in the value of imports.

The Commerce Department said the trade deficit narrowed to $51.1 billion in January from a revised $59.9 billion in December. Economists had expected the deficit to shrink to $57.0 billion.

In the previous month, the trade deficit increased to its highest level since reaching $60.2 billion in October of 2008.

The narrower than expected deficit came as the value of imports tumbled by 2.6 percent to $258.5 billion, while the value of exports rose by 0.9 percent to $207.3 billion.

Michael Pearce, Senior U.S. Economist at Capital Economics, noted the steep drop in the value of imports is "hardly a positive sign for the economy."

"Nonetheless, with imports now likely to have been flat, or fallen slightly, in the first quarter overall, net trade is likely to be a positive for economic growth in the first quarter," Pearce said.

He added, "We now expect first quarter GDP growth to come in around 2.0% annualized, up from our previous estimate of 1.5%."

Biotechnology stocks showed a significant move to the downside on the day, dragging the NYSE Arca Biotechnology Index down by 1.8 percent.

Considerable weakness was also visible among tobacco stocks, as reflected by the 1.5 percent drop by the NYSE Arca Tobacco Index.

Semiconductor, telecom, gold, and software stocks also saw notable weakness, moving lower along with most of the other major sectors.

Meanwhile, housing stocks bucked the downtrend on the day, with the Philadelphia Housing Sector Index jumping by 1.5 percent.

Homebuilder Lennar (LEN) posted a strong gain after reporting weaker than expected fiscal first quarter results but saying underlying housing market fundamentals remain favorable.

Commodity, Currency Markets

Crude oil futures are tumbling $1.02 to $58.39 a barrel after sliding $0.53 to $59.41 a barrel a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,300.60, down $9.80 compared to the previous session's close of $1,310.40. On Wednesday, gold dropped $4.60.

On the currency front, the U.S. dollar is trading at 110.52 yen compared to the 110.51 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1229 compared to yesterday's $1.1244.

Asia

Asian stocks turned in another mixed performance Thursday, as sliding U.S. bond yields rekindled growth concerns and the British Parliament failed to agree on an alternative to Prime Minister Theresa May's EU withdrawal plan.

Chinese shares fell as investors awaited a resumption of trade talks between the U.S. and China. The benchmark Shanghai Composite Index slumped 27.78 points or 0.9 percent to 2,994.94, although Hong Kong's Hang Seng Index rose 46.96 points or 0.2 percent to 28,775.21.

Japanese shares led regional losses as Brexit uncertainty coupled with fears of slowing growth drove investors to the safety of safe-haven assets such as gold and the yen.

The Nikkei 225 Index tumbled 344.97 points or 1.6 percent to 21,033.76, while the broader Topix ended down 1.7 percent at 1,582.85.

Exporters Canon, Honda Motor, Tokyo Electron, Sony, Panasonic and Subaru Corp fell 1-3 percent. Renesas Electronics lost 5.4 percent and Rohm Co. gave up 4.6 percent after German chipmaker Infineon issued a profit warning.

Meanwhile, Australian markets reversed early losses to finish higher despite mounting global risks. The benchmark S&P/ASX 200 Index climbed 40.10 points or 0.7 percent to 6,176.10, while the broader All Ordinaries Index ended up 38.90 points or 0.6 percent at 6,256.50.

The big four banks ended flat to slightly higher as the CEOs of two lenders said a crackdown on consumer credit checks was affecting their ability to write new home loans.

Origin Energy, Woodside Petroleum and Santos rose 1-2 percent even as oil extended losses on data showing a surprise build in U.S. crude inventories.

Mining heavyweights BHP and Rio Tinto climbed around 1 percent. Gold miners such as Evolution and Newcrest also closed higher on safe-haven buying.

Lithium miner Pilbara Minerals soared 15 percent after the company announced it would soon start commercial production at its Pilgangoora project.

Seoul stocks fell sharply as investors braced for the upcoming earnings season. The benchmark Kospi dropped 17.52 points or 0.8 percent to 2,128.10, the lowest closing level since January 23.

Tech stocks paced the decliners, with Samsung Electronics, SK Hynix, LG Electronics and LG Display losing 1-3 percent.

On the other hand, Asiana Airlines jumped 2.9 percent after its CEO Park Sam-koo vowed to resign, taking responsibility for the fiasco over 2018 financial statements.

Europe

European stocks have moved mostly higher on Thursday as signs of progress in U.S.-China trade talks help investors shrug off uncertainty over Brexit as well as renewed concerns over slowing economic growth.

Citing U.S. officials, Reuters said there has been progress on all fronts in U.S.-China trade talks, although no definite timetable to reach a final deal was laid out.

Elsewhere, the Brexit process remains in deadlock after members of parliament, who have seized control of the timetable from the government, failed to rally behind any single option.

While the U.K.'s FTSE 100 Index has climbed by 0.5 percent, the German DAX Index and the French CAC 40 Index are up by 0.2 percent and 0.1 percent, respectively.

Unilever is moving higher in Amsterdam on news it is launching stricter advertiser criteria for publishers in an effort to boost consumer trust.

Deutsche Telekom has moved modestly higher after company said it expects to cut its carbon footprint by 90 percent in total by 2030.

Aareal Bank has also moved to the upside. In a letter to shareholders, CEO Hermann Merkens said the company has set the right course with its "Aareal 2020" program and made significant progress again last year in the implementation process.

On the other hand, construction firm Hochtief has moved sharply lower following news of share sale by Atlantia.

Renault has also fallen as Nissan Motor Co.'s CEO said he was not aware of discussions about deal-making around the embattled Renault SA-Nissan partnership.

Swedbank has also tumbled on concerns over an investigation into a suspected fraud.

U.S. Economic Reports

In a report likely to exacerbate concerns about slowing economic growth, the Commerce Department revealed Thursday the increase in U.S. gross domestic product in the fourth quarter was downwardly revised by more than anticipated.

The Commerce Department said GDP climbed by 2.2 percent in the fourth quarter compared to the previously reported 2.6 percent increase. Economists had expected the pace of growth to be downwardly revised to 2.4 percent.

With the downward revision, the pace of GDP growth in the fourth quarter is notably slower than the 3.4 percent jump in the third quarter.

Meanwhile, a separate report from the Labor Department showed an unexpected decrease in first-time claims for U.S. unemployment benefits in the week ended March 23rd.

The report said initial jobless claims dipped to 211,000, a decrease of 5,000 from the previous week's revised level of 216,000.

The drop came as a surprise to economists, who had expected jobless claims to rise to 225,000 from the 221,000 originally reported for the previous week.

Federal Reserve Vice Chairman Richard Clarida is due to participate in a panel discussion about global shocks and the U.S. economy at the Banque de France and European Money and Finance Forum Colloquium in Paris in 9:30 am ET.

At 10 a, ET, the National Association of Realtors is scheduled to release its report on pending home sales in the month of February. Pending home sales are expected to rise by 0.7 percent in February after spiking by 4.6 percent in January.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Fed Board Member Michelle Bowman is also due to deliver a speech about "Agriculture and Community Banking" at the Independent Community Bankers Association of New Mexico 2019 Ag Lenders Conference in Deming, New Mexico, at 10 am ET.

At 11:30 am ET, Atlanta Fed President Raphael Bostic is scheduled to participate in the panel discussion about workforce development, income mobility and income inequality at the Commerce Club in Atlanta, Georgia.

The Treasury Department is due to announce the results of its auction of $32 billion worth of seven-year notes at 1 pm ET.

At 1:15 pm ET, New York Fed President John Williams is scheduled to participate in a moderated discussion about the economy with the President of the Puerto Rico Chamber of Commerce in San Juan.

Williams is also due to participate in a roundtable discussion focused on small business and entrepreneurship at Parallel 18 in San Juan at 2:30 pm ET.

Around 5 pm ET, St. Louis Fed President James Bullard is scheduled to deliver a presentation about the U.S. economy and monetary policy at a Center for Research on the Wisconsin Economy seminar in Madison, Wisconsin.

Stocks In Focus

Shares of PVH Corp. (PVH) are moving significantly higher in pre-market trading after the clothing company reported fiscal fourth quarter results that exceeded analyst estimates and provided upbeat guidance.

Athletic apparel retailer Lululemon Athletica (LULU) is also likely to see initial strength after reporting better than expected fiscal fourth quarter results and announcing a $500 million stock repurchase program.

Shares of Accenture (ACN) may also move to the upside after the consulting and outsourcing services provider reported fiscal second quarter results that beat expectations and raised its full-year earnings forecast.

On the other hand, shares of Nielsen Holdings (NLSN) are moving sharply lower in pre-market trading after a report from the New York Post said private equity giant Blackstone Group (BX) has decided against making a final offer to acquire the consumer research firm.
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