China data, steadying yuan lift futures
U.S. stock index futures inched higher on Thursday as better-than-expected Chinese trade data and a steadying of its currency offered some comfort to investors rattled by an escalation in trade tensions and signals pointing to a recession.
The yuan regained some ground even as China's central bank set its official midpoint below the seven to the dollar threshold. Exports from the world's second-largest economy posted a surprise rise, while imports fell less than forecast.
The latest data soothed some nerves after the S&P 500 on Monday posted its steepest percentage fall this year as the yuan slumped to its lowest in a decade. Signals from the bond market were ominous as well, with a closely watched U.S. recession indicator reaching its highest level since March 2007 on Tuesday.
While the benchmark index has enjoyed a slight relief in the past two days, it still stands about 5% away from its record closing high hit last month. At 6:53 a.m. ET, Dow e-minis 1YMcv1 were up 32 points, or 0.12% and S&P 500 e-minis EScv1 were up 6.75 points, or 0.23%.
Nasdaq 100 e-minis NQcv1 were up 31 points, or 0.41%. Shares of Symantec Corp (SYMC.O) and Advanced Micro Devices Inc (AMD.O) bolstered futures for Nasdaq 100. Symantec jumped 12.3% after sources said chipmaker Broadcom Inc (AVGO.O) is in advanced talks to buy the cybersecurity company's enterprise business.
AMD gained 5% after the chipmaker released the second generation of its processor chip for data centers and said that it had landed Alphabet Inc' (GOOGL.O) Google and Twitter Inc (TWTR.N) as customers. Lyft Inc (LYFT.O) advanced 5.4% after the ride hailing service raised its outlook for the year and forecast a faster path to profitability.
Rival Uber Technologies Inc (UBER.N), due to report quarterly results after the bell, rose 4%. Shares of Walt Disney Co (DIS.N) rose 1.1% after Credit Suisse upgraded its shares to "outperform" on positive investor sentiment as its video streaming service Disney+ closes in on its U.S. launch.
Shares of CenturyLink Inc (CTL.N) fell 5.7% after the telecommunications services provider missed second-quarter revenue estimates.
China's major state-owned banks have been active in the yuan forwards markets this week, sources said, using swaps to curb greenback supply as authorities sought to slow the currency's decline after its break past the key 7 to the dollar threshold.
The move to contain the yuan's decline comes after the Sino-U.S. trade war broadened to include foreign exchange with Washington on Monday branding Beijing a currency manipulator for the first time since 1994. That pushed the offshore yuan to a record low and the onshore currency past the psychologically important 7 to dollar mark for the first time in 11 years.
Four sources with knowledge of the matter told Reuters that state banks were seen swapping yuan for dollars in onshore forwards market to support the Chinese unit. "Yesterday big banks were all selling one-year onshore forward swaps, then in the afternoon the spot dollaryuan fell," said a trader at a foreign bank in Shanghai.
While China's central bank had allowed the yuan on Monday to break through key levels, authorities are keen to avoid a precipitous decline that could trigger capital outflows and destabilise wider financial markets.