FX.co ★ Futures Pointing To Sharply Higher Open On Wall Street

The major U.S. index futures indicate a sharply lower opening on Thursday, suggesting an early rally for stocks after a moderately lower close in yesterday's session due to late-day volatility.

The considerable upward momentum on Wall Street is driven by traders digesting the Federal Reserve's decision on Wednesday to cut interest rates by 50 basis points. Fed officials also projected continued rate cuts in the coming months and into next year, generating optimism that the central bank will manage a soft landing for the economy.

Supporting this buying interest, a recent Labor Department report showed that first-time claims for U.S. unemployment benefits unexpectedly fell to a nearly four-month low for the week ending September 14th. Initial jobless claims slid to 219,000, a decrease of 12,000 from the previous week's revised level of 231,000, contrary to economists' predictions that claims would remain unchanged from the previously reported 230,000. This marks the lowest level of jobless claims since reaching 216,000 for the week ending May 18th.

Stocks experienced considerable late-session volatility on Wednesday following the Federal Reserve's announcement of its rate cut. Major averages fluctuated wildly before eventually closing in negative territory. The Dow and the S&P 500 reached new record intraday highs immediately following the Fed announcement but ended the day in the red. The Dow dropped 103.08 points, or 0.3%, to 41,503.10. The S&P 500 slipped 16.32 points, or 0.3%, to 5,618.26, and the Nasdaq dipped 54.76 points, or 0.3%, to 17,573.30.

The late-day volatility followed the Fed's first rate reduction in over four years, aggressively cutting rates by half a percentage point. The Fed noted increased confidence that inflation is sustainably moving towards its 2% target, lowering the target range for the federal funds rate by 50 basis points to 4.75 to 5.00%.

The decision to opt for a larger rate cut was expected, although there was debate over whether the reduction would be 25 or 50 basis points. The Fed indicated that the risks to its employment and inflation goals are roughly balanced. Economic projections from the meeting suggested another 50 basis point cut by the end of the year, with further reductions totaling an additional full percentage point by the end of 2025.

"The Fed front-loaded this rate-cutting cycle with a jumbo 50 bps cut and emphasized their focus on the labor market, stating they are 'strongly committed to supporting maximum employment,'" said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance. "We anticipate market volatility as we approach the election. However, the current rate cuts and forecasts of further reductions should likely enable the market to reach all-time highs by year-end, with additional gains next year."

In U.S. economic news, a report from the Commerce Department showed a significant rebound in new residential construction for August. Most major sectors exhibited modest moves, contributing to the lackluster performance of the broader markets.

Gold stocks saw considerable weakness as gold prices came under pressure in electronic trading, dragging the NYSE Arca Gold Bugs Index down by 1.4%. A notable decrease in crude oil prices also impacted oil service stocks, reflected by the 1.3% loss in the Philadelphia Oil Service Index. Semiconductor, software, and networking stocks also trended downward, contributing to the Nasdaq's decline.

**Commodity and Currency Markets**

Crude oil futures are climbing $0.70 to $71.61 per barrel after dipping $0.28 to $70.91 per barrel on Wednesday. Gold futures are rising $11.90 to $2,610.50 an ounce, following a $6.20 increase to $2,598.60 an ounce in the previous session.

In the currency market, the U.S. dollar is trading at 143.45 yen, up from 142.29 yen at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1130 compared to yesterday's $1.1119.

**Asia**Asian markets saw broad gains on Thursday following the U.S. Federal Reserve's surprising decision to reduce borrowing costs by 50 basis points. This move, more aggressive than typical adjustments, signals a strategic pivot toward supporting the job market in the coming months.

The U.S. dollar rebounded, and yields on long-term bonds increased, while gold hovered near record highs. Oil prices also experienced a recovery, despite ongoing concerns about global demand.

In China, the Shanghai Composite Index rose by 0.7% to close at 2,736.02, and Hong Kong's Hang Seng Index surged 2.0%, ending the day at 18,013.16. The Hong Kong Monetary Authority followed suit, cutting its base interest rate for the first time since 2020.

Japanese markets experienced significant gains, driven by a weakening yen and anticipation of the Bank of Japan’s policy meeting on Friday, where rates are expected to remain unchanged. The Nikkei 225 Index soared 2.1% to 37,155.33, led by strong performances from exporters, including automakers and electronics manufacturers. The Topix Index also gained 2.0%, closing at 2,616.87.

In South Korea, the Kospi Index edged up by 0.2% to 2,580.80, driven by a rally in automakers like Hyundai Motor, which jumped 3.8%, and its affiliate, Kia Corp., which advanced 3%. However, SK Hynix plummeted by 6.1% after Morgan Stanley downgraded its target price, citing a looming downturn in the DRAM and high-bandwidth memory markets. Samsung Electronics also declined by over 2%.

Australia's markets reached new highs, underpinned by rallies in mining and energy stocks following the Federal Open Market Committee's (FOMC) rate cut. The S&P/ASX 200 Index climbed 0.6% to 8,191.90, and the All Ordinaries Index also rose by 0.6%, closing at 8,417. New Zealand's S&P/NZX-50 Index increased by 0.6% to 12,665, driven by economic data indicating a contraction in the second quarter, which could precede rate cuts.

### Europe

European equities advanced on Thursday, buoyed by the Fed's rate cut announcement and signals of further easing, which raised hopes for a soft landing for the U.S. economy. The Bank of England decided to keep its benchmark rate unchanged, following a quarter-point cut in the past month. It also extended its bond reduction plan for another year.

France's CAC 40 Index jumped 2.0%, Germany's DAX Index rose by 1.7%, and the U.K.'s FTSE 100 Index gained 1.0%. Rising base metal prices boosted mining stocks, with Anglo American, Antofagasta, and Glencore seeing significant gains. British retailer Next also experienced a notable increase after raising its annual profit forecast, and online grocer Ocado soared following an upgrade in its revenue projections. Close Brothers surged after announcing the sale of its wealth management unit to a private equity firm. Despite a sharp decline in Europe's new car registrations in August, automakers Renault, Volkswagen, and Mercedes Benz posted gains.

### U.S. Economic News

New unemployment claims in the U.S. unexpectedly fell to a nearly four-month low for the week ending September 14th, as reported by the Labor Department. Initial jobless claims decreased by 12,000 from the previous week’s revised figure, settling at 219,000. Economists had anticipated claims to remain steady at the initially reported 230,000.

Additionally, the Federal Reserve Bank of Philadelphia released a report indicating an unexpected return to growth in the Philadelphia area's manufacturing activity. The Philly Fed’s diffusion index for current general activity rose to 1.7 in September from -7.0 in August. While economists expected the index to hit 2.0, the report underscored that firms are optimistic about growth over the next six months, with expectations notably higher.At 10 a.m. Eastern Time, the National Association of Realtors will release its report on existing home sales for the month of August. Expectations are that existing home sales will decrease to an annual rate of 3.90 million in August, down from a rate of 3.95 million in July.

The Conference Board is also set to publish its report on leading economic indicators for August at 10 a.m. Eastern Time. The leading economic index is anticipated to decline by 0.3 percent in August, following a 0.6 percent decrease in July.

At 11 a.m. Eastern Time, the Treasury Department will announce details regarding this month's auctions of two-year, five-year, and seven-year notes.