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A pedestrian is reflected in an electronic board showing the various stock prices outside a brokerage in Tokyo on Aug. 13, 2014. (YUYA SHINO/REUTERS)
A pedestrian is reflected in an electronic board showing the various stock prices outside a brokerage in Tokyo on Aug. 13, 2014. (YUYA SHINO/REUTERS)

Premarket: Futures rise as tensions in Ukraine, Iraq wane Add to ...

U.S. stock index futures rose on Wednesday amid a perceived easing of tensions in both Ukraine and Iraq, which pushed investors to seek bargains.

Wall Street has struggled for direction of late, notching both steep losses and solid gains - often on low trading volume - with equities largely moving on the news flow from abroad. Investors have been concerned in recent weeks about the potential fallout of a protracted conflict or escalation of crises in Ukraine, the Gaza Strip or Iraq.

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In Ukraine, Poland’s foreign minister said the threat of Russia invading Ukraine had receded amid reports an aid convoy that Moscow is sending to eastern Ukraine would cross the border under the aegis of the Red Cross. Western officials had been wary of the convoy, speculating it may be a cover for invasion.

Russia’s dollar-denominated RTS index jumped about 1 percent and the Market Vectors Russia Exchange-Traded Fund was up 0.9 percent to $24.22 in premarket trading.

Investors also continued to monitor the situation in Iraq, where the country’s new prime minister-designate won endorsements from both the United States and Iran, as well as Shi’ite militia and army commanders long loyal to Nuri al-Maliki, the previous prime minister, who has refused to step aside. The support of the army commanders may signal a lower likelihood the country would further descend into violence.

S&P 500 e-mini futures rose 9.5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average e-mini futures rose 69 points and Nasdaq 100 e-mini futures added 19.75 points.

Based on its Tuesday close, the S&P 500 is 2.7 percent away from a record close reached late July, suggesting some market participants may be finding value in the market. Earnings season has boosted the market this quarter, with more companies than usual topping expectations for both profit and revenue, according to Thomson Reuters data.

Macy’s Inc. is on tap to report Wednesday morning, with Cisco Systems due out after the market closes.

Deere & Co. dipped 0.8 per cent in premarket trading after the company gave a full-year outlook, though it also reported third-quarter sales that topped expectations.

Amazon.com Inc rose 1.8 per cent to $324.99 in premarket trading after the online retailer unveiled a $10 credit-card reader and mobile app for brick-and-mortar businesses, marking its latest step to expand its presence in the physical world. Shares of eBay Inc. dipped 0.9 per cent to $52.95.

World stock markets ticked higher as brighter corporate results offset gloomy economic news from Asia and as oil prices plumbed 13-month lows as ample supply offset disruption risks posed by tensions in Iraq and Libya.

European shares gained ground, helped in part by forecast-beating results from bellwethers such as Swiss Life – whose stock jumped 3.5 per cent after the open.

The FTSEurofirst 300 index of top European shares was up 0.4 per cent, with MSCI’s world stock index up 0.6 per cent.

Recent market anxiety over the standoff between Russia and Ukraine ebbed slightly after Polish Foreign Minister Radoslaw Sikorski said late on Tuesday that the possibility of Russia’s military invading eastern Ukraine has receded after Moscow agreed to send in humanitarian aid under Red Cross auspices.

Russian shares rose 0.4 per cent on the reports that the aid convoy would cross the border under Red Cross supervision.

“The market is rangebound for now, with the focus on the tense situation in Ukraine, as well as on GDP figures for Germany and France due tomorrow,” IG France chief market analyst Alexandre Baradez said.

“There’s a lot of confusion about the Russian humanitarian convoy heading to Ukraine.”

Brent crude slipped below $103 a barrel to trade at its lowest level in more than a year as supply continued strong.

September Brent crude futures, which expire on Thursday, fell as low as $102.37 (U.S.), the weakest for a front-month since July 1, 2013. It was the fourth day of losses for the benchmark and comes after the International Energy Agency (IEA) pointed to well-supplied global markets and a glut in the Atlantic Basin.

Output from the Organization of the Petroleum Exporting Countries rose to a five-month high of 30.44 million barrels a day in July as increased production from Saudi Arabia and Libya more than offset declines in Iraq, Iran and Nigeria.

“Brent prices have been in a steady decline and I think the background of that is that the market is forming the view that any supply disruptions are not on the immediate horizon,” CMC Markets chief market analyst Ric Spooner said.

But subpar global economic numbers were also a factor in generally weak commodity prices. Copper, seen as a barometer of world demand, fell to a six-week low of $6,926.50 per tonne on Wednesday.

Asian shares eked out modest gains, even though mainland Chinese shares were knocked off their highs by surprisingly weak loans data. Data also showed Japan’s economy shrank an annualized 6.8 per cent from the previous quarter – the biggest contraction in three years – but the outcome was slightly better than market forecasts.

German government bond yields edged higher on Wednesday before an auction of 10-year German debt, but they remained near record lows amid jitters about the economic fallout in Germany and the rest of Europe from the Ukraine crisis.

German inflation for July was confirmed at 0.8 per cent year-on-year, showing how weak inflationary pressures are even in the region’s strongest economy. Euro zone industrial output will be released later in the day and second-quarter gross domestic product reports from across the region are due on Thursday.

German 10-year yields rose 1 basis point to 1.07 per cent, not far from last week’s record low of 1.02 per cent. Yields usually rise before debt sales as traders make room in their books for the new paper, but analysts expected them to be pinned at record lows in the near term.

“The underlying sentiment remains weak. Until these geopolitical tensions start easing, investors will continue to look for the safety of top-rated assets,” RIA Capital Markets bond strategist Nick Stamenkovic said.

In currency markets, sterling edged up as investors trimmed bets against the currency before a Bank of England report, that may give clues on when Britain will start to tighten monetary policy.

The Bank of England’s Inflation Report, which will include updated economic forecasts, is likely to provide a fresh steer on the BoE’s intentions for rate hikes. The bank has said before that rate hikes will be data driven and gradual.

The pound edged up 0.1 per cent against the dollar to $1.6825, pulling away from Tuesday’s two-month low of $1.6757.

 

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