U.S. stock futures point to a significantly higher open on Thursday, buoyed by U.S. Federal Reserve Chairman Ben Bernanke’s comments about the continuation of easy monetary policy, which overshadowed concerns over a lack of consensus among members of the Federal Open Market Committee, or FOMC, about the future of the Fed's massive bond-buying program.
Investors will also look to the publication of the initial and continuing jobless claims reports, and the release of the import price index.
Futures on the Dow Jones Industrial Average were up 1.0 percent, while futures on the Standard & Poor's 500 Index were up 0.96 percent and those on the Nasdaq 100 Index were up 0.89 percent.
Bernanke, in a speech to economists on Wednesday, cited continuing weakness in the labor market and low inflation as reasons to continue the asset-purchase program and a near-zero percent interest rate scenario, for the "foreseeable future."
However, minutes of the FOMC meeting from June 18-19, released only three hours before his speech, revealed that about half of the members favored slowing the pace of the Fed’s -a-month bond-buying program.
“This division is acting as a catalyst to optimism as it at least keeps the debate open as to whether the U.S. economy is strong enough to cope with a reduction in stimulus measures,” Shavaz Dhalla, a financial trader at Spreadex, said in a note, according to MarketWatch.
However, some economists believe that the Fed will be forced to stick to its earlier goal of scaling down the bond-buying program by the year end.
“Bernanke and the Fed are going to be sticking to their guns and thereby shooting the economy in the foot,” Adam Posen, president of the Peterson Institute for International Economics and a former member of the Bank of England’s monetary policy committee, told MarketWatch. “We’ve gotten a commitment to tighten that is totally at odds with the forecast.”
The initial jobless claims report, which measures the number of individuals who filed for unemployment insurance for the first time last week, is scheduled to be released by the Department of Labor at 8:30 a.m. EDT. Economists predict that claims are likely to decline to 340,000 for the week ended July 6, down from 343,000 in the previous week.
Meanwhile, economists expect continuing job claims data, which measure the number of unemployed individuals who qualify for benefits under unemployment insurance, to increase to 2.95 million from the 2.93 million recorded in the previous week.
Investors are also expected to focus on the Import Price Index due to be released at 8:30 a.m. EDT. The index, which measures the change in the price of imported goods and services purchased domestically, is expected to fall by 0.1 percent in June for the fourth month in a row, after falling 0.5 percent in May.
European markets rebounded following Bernanke’s comments about the future of the Fed’s monetary policy, with the Stoxx Europe 600 index gaining 0.55 percent. London’s FTSE 100 was up 0.76 percent, Germany's DAX-30 was up 1.04 percent and France's CAC-40 was trading up 0.68 percent.
In Asia, markets were buoyed by the Fed chairman’s comments and speculation that China’s government might take steps to stabilize economic growth in that country. The MSCI Capital Index, excluding Japan, gained 3.10 percent, on Thursday, to hit a three-week high.
In China, the Shanghai Composite index ended up 3.23 percent and Hong Kong’s Hang Seng Index gained 2.55 percent, while Australia’s S&P/ASX 200 rallied to end the day up 1.31 percent.
South Korea’s KOSPI Composite index closed up 2.93 percent as the country’s central bank left interest rates unchanged, and India’s BSE Sensex ended the day up 1.95 percent. In Japan, the Nikkei ended up 0.39 percent, after declining in morning trade, after the Bank of Japan kept interest rates steady, and cut its growth and inflation forecasts.