U.S. equities are trading higher in the premarket session, but momentum will largely depend on U.S. GDP data as well as Federal Reserve Chair Janet Yellen’s statement on monetary policy.
Series of positive data
S&P 500 Index (INDEXCBOE:SPX) Futures added 0.50 points to 2,090.25 while Nasdaq (INDEXNASDAQ:NDX) Futures rose 0.13% to 4,497.88. According to some opinions, Yellen’s speech at Harvard could initiate a fresh bull run in the U.S. Dollar (CURRENCY:USD).
The outlook over the US economy is already buoyant based on improved economic indicators this month. A string of data released on Thursday has reconfirmed the region’s path to recovery. The U.S. National Association of Realtors reported that pending home sales climbed 5.1% in April, surpassing expectations of an increase of 0.6%. The growth is the highest in a decade.
This report followed data from the U.S. Department of Labor, which disclosed a remarkable improvement in the employment scenario. The report said that the number of individuals filing for jobless claims declined by 10,000 to 268,000 last week versus 278,000 during the preceding week. The number came in better than preliminary projections of a fall of 3,000 to 275,000.
China woes can hold Fed
Another report from the U.S. Commerce Department added optimism as it noted that durable goods orders inched up 3.4% in April, which compares to the expectations of a rise of 0.5%. If US GDP data comes in line with projections then the U.S. economy seems to be ready to embrace a rate hike, according to market experts.
Although CME group Fedwatch shows only a 26% probability of an early rate hike, a hawkish tone from Yellen could prove to be a catalyst for markets. According to more conservative opinions, global economic health and concerns around China can prevent the Fed from undertaking its monetary tightening aggressively.
Asian stocks were higher, but trading activity in Europe was largely muted. In commodities, renewed oil supply concerns arrested the rally in oil during the European session.