US pre-open: Chinese easing fuels gains despite mixed US data
US stock futures were pointing to more gains on Thursday, with the Dow Jones Industrial Average likely set to extend a record high as investors reacted to news of further monetary easing in China.
As of 08:53 in New York, futures on the Dow, S&P 500 and Nasdaq were all 0.2-0.3% higher.
The Dow rose 0.15% to 17,157 on Wednesday after the Federal Reserve maintained its pledge to keep short-term interest rates near zero for a "considerable time" after quantitative easing (QE) ends.
The comments came after the Federal Open Market Committee took another $10bn off of its monthly asset purchase programme to $15bn, leaving it on track to wind up QE next month. However, while it said it still sees room for improvement in the labour market, policymakers lifted their interest rate projections for 2015 and 2016 slightly.
News that the People's Bank of China had cut the 14-day 'repo' rate - one of the short-term financing channels for banks - lifted sentiment on global stock markets as Beijing continues to attempt to avert a slowdown in the world's second-largest economy. The central bank on Wednesday injected $81bn into China's five-largest banks to boost liquidity.
Mixed domestic economic data wasn't doing much to deter the positive mood in pre-market trading on Wall Street despite the latest figures showing weakness in the housing sector albeit accompanied by a large drop in claims for unemployment benefits.
US housing starts dropped 14.4% in August to a seasonally adjusted annual rate of 956,000, according to the Commerce Department, after a revised 22.9% surge in July, The consensus forecast was for a figure closer to 1.04m.
US building permits also declined last month, falling 5.6% to 998,000 after a 8.6% gain in July. The market had estimated 1.04m.
Meanwhile, US jobless claims declined by 36,000 to a two-month low of 280,000 last week, well below the 305,000 expected by analysts.
In corporate news, shares of drugstore group Rite Aid sank ahead of the bell after the company cut its full-year earnings per share (EPS) guidance from 30-40 cents to just 22-33 cents.
Carbon-steel producer and metals recycler Steel Dynamics was on the rise after forecasting third-quarter EPS of 42-46 cents, ahead of the 37 cents consensus estimate.