Market Analysis

The major U.S. index futures are pointing to a modestly higher open on Friday on the heels of the moderate weakness seen in the previous session. Early trading activity is likely to be somewhat subdued, however, as traders await incoming President Donald Trump’s inaugural address.

Trump’s speech is expected to be relatively light on policy details, although the tone of his remarks could impact the markets. Traders are also likely to keep an eye on any immediate actions taken by Trump after he is officially sworn in as the nation’s 45th president.

After initially showing a lack of direction, stocks moved moderately lower over the course of the trading session on Thursday. The Dow closed lower for the fifth consecutive session, falling to its lowest closing level in over a month.

The major averages closed in negative territory but off their worst levels of the day. The Dow fell 72.32 points or 0.4 percent to 19,732.40, the Nasdaq dipped 15.57 points or 0.3 percent to 5,540.08 and the S&P 500 slid 8.20 points or 0.4 percent to 2,263.69.

The weakness on Wall Street was partly due to uncertainty about President-elect Donald Trump’s policies ahead of his inauguration. Trump’s surprise victory initially triggered a rally on Wall Street, but traders have recently expressed caution as they wait to see what he will actually do once officially in office.

On the U.S. economic front, first-time claims for U.S. unemployment benefits unexpectedly declined in the week ended January 14th, according to a report released by the Labor Department.

The report said initial jobless claims fell to 234,000, a decrease of 15,000 from the previous week's revised level of 249,000. Economists had expected jobless claims to rise to 255,000.

A separate report from the Commerce Department showed a significant rebound in housing starts in the month of December.

The Commerce Department said housing starts jumped by 11.3 percent to an annual rate of 1.226 million in December from the revised November rate of 1.102 million.

Economists had expected housing starts to rise to an annual rate of 1.200 million from the 1.090 million originally reported for the previous month.

Meanwhile, the report said building permits, an indicator of future housing demand, edged down by 0.2 percent to a rate of 1.210 million in December from 1.212 million in November.

Building permits had been expected to rise to 1.230 million from the 1.201 million originally reported for the previous month.

Additionally, the Federal Reserve Bank of Philadelphia said regional manufacturing activity unexpectedly grew at a faster pace in the month of January.

The Philly Fed said its index for current manufacturing activity in the region rose to 23.6 in January from a revised 19.7 in December, with a positive reading indicating growth.

The increase came as a surprise to economists, who had expected the index to drop to 16.0 from the 21.5 originally reported for the previous month.

Overseas, the European Central Bank left its key interest rates unchanged and maintained its asset purchases, confirming that they will continue at a reduced pace till the end of this year.

Steel stocks came under pressure on the day, giving back ground after yesterday’s rally. The NYSE Arca Steel Index slumped by 1.9 percent after ending the previous session at its best closing level in over a month.

Trucking stocks also showed a significant move to the downside, dragging the Dow Jones Trucking Index down 1.8 percent. With the drop, the index fell to its lowest closing level in well over a month.

Electronic storage, commercial real estate, and pharmaceutical stocks also came under pressure, contributing to the lower close by the broader markets.

On the other hand, railroad stocks moved sharply higher on the day, driving the Dow Jones Railroads Index up by 6.9 percent to its best closing level since early 2015.

Commodity, Currency Markets

Crude oil futures are climbing $0.78 to $52.15 a barrel after rising $0.29 to $51.37 a barrel on Thursday. Gold futures are currently trading at $1,202.30 an ounce, up $0.80 from the previous session’s close of $1,201.50 an ounce. On Thursday, gold fell $10.60.

On the currency front, the U.S. dollar is trading at 114.99 yen compared to the 114.86 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0645 compared to yesterday’s $1.0664.

Asia

Asian stocks ended mixed on Friday, with Chinese and Japanese shares leading regional gains, while markets in Australia, Hong Kong and South Korea retreated ahead of the inauguration of President-elect Donald Trump later in the day.

Investors also digested a raft of Chinese economic data, dovish comments from European Central Bank President Mario Draghi and Federal Reserve Chair Janet Yellen's speech in California about the state of the U.S economy.

China's Shanghai Composite Index climbed 21.84 points or 0.70 percent to 3,123.14 as a slew of economic reports released by the country's statistics agency offered fresh signs of stability in the world's second-largest economy. Meanwhile, Hong Kong's Hang Seng Index fell 164.05 points or 0.71 percent to 22,885.91.

Chinese GDP grew an annual 6.8 percent in the fourth quarter, slightly beating expectations, boosted by higher government spending and record bank lending, official data showed. Retail sales figures for December came in slightly above forecasts, while industrial production and fixed-asset investment grew at a slower but still solid pace during the month.

Japan's Nikkei 225 Index recovered from a weak start to close 65.66 points or 0.34 percent higher at 19,137.91. The broader Topix index closed 0.35 percent higher at 1,533.46.

Panasonic added 1.3 percent after the company said it hopes to extend its partnership with electric car maker Tesla (TSLA) beyond batteries and into self-driving technology. Brewer Kirin Holdings also gained 1.3 percent on reports that Netherlands-based Heineken is in advanced talks to buy Kirin's Brazilian unit.

Embattled air bag maker Takata Corp plunged 21 percent to extend losses from the previous session in the wake of media reports suggesting that its bidders are pushing for a court-mediated turnaround for its domestic business.

On the other hand, Australia's S&P/ASX 200 Index fell 37.40 points or 0.66 percent to 5,654.80, taking its weekly loss to 1.2 percent. The broader All Ordinaries Index dropped 35.70 points or 0.62 percent to 5,709.70 despite upbeat housing data, which showed that new home sales bounced strongly in November following a drop to a two-year low in October.

Financials led the decline, with the big four banks falling between 0.9 percent and 1.6 percent. Miners BHP Billiton, Fortescue Metals Group and Rio Tinto lost 1-2 percent after iron ore and copper prices declined overnight.

OrotonGroup shares slumped nearly 14 percent as the luxury handbag and accessories maker reported a drop in its first half year sales for 2017.

Meanwhile, CSL advanced 2.8 percent after upgrading its profit forecast. Shaver Shop Group soared 12.3 percent after unveiling its December sales figures.

Europe

European stocks are little changed on Friday as disappointing U.K. retail sales data dampened optimism on the British economy and investors looked for more details on Trump's policies.

While the U.K.’s FTSE 100 Index has edged down by 0.1 percent, the German DAX Index is up by 0.1 percent and the French CAC 40 Index is up by 0.2 percent.

Trump will be sworn in as the President of the United States of America today, with market participants looking forward to his speech for more clarity on proposals pertaining to tax cuts, infrastructure spending and immigration laws.

In a report, the U.K. Office for National Statistics said that retail sales volume including auto fuel fell 1.9 percent from November following a marginal 0.1 percent drop in November. This was bigger than the expected 0.1 percent drop and marked the second consecutive fall in sales.

SDL has soared after the translation software firm said it expects both continuing operations revenue and adjusted profit before tax to be slightly ahead of market expectations. Close Brothers has also moved higher after the lender expressed confidence over its full-year results.

LVMH shares have edged higher after the luxury goods group announced plans to take a stake of up to 10 percent in unlisted Italian eyewear group Marcolin.

Meanwhile, French voucher and prepaid card provider Edenred has come moved to the downside after major shareholder Colony Capital sold its entire 11.2 percent stake in the company.

U.S. Economic Reports

While there is no major U.S. economic data scheduled to released on Friday, Philadelphia Federal Reserve President Harker is due to discuss the economic outlook at the New Jersey Bankers Association 6th Annual NJ Economic Leadership Forum in Somerset, New Jersey, at 9 am ET.

At 1 pm ET, San Francisco Fed President John C. Williams is scheduled to give closing remarks at the Bay Area Council 10th Annual Economic Forecast in San Francisco, California.

Stocks in Focus

Tech giant IBM (IBM) reported fourth quarter earnings and revenues that exceeded analyst estimates, although its revenues fell for the 19th straight quarter.

American Express (AXP) reported fourth quarter earnings that came in below expectations despite better than expected revenues. The credit card giant also raised its 2017 earnings guidance.

Consumer products giant Procter & Gamble (PG) reported second quarter results that exceeded analyst estimates on both the top and bottom lines and raised its forecast for organic sales growth for the full year.

General Electric’s (GE) fourth quarter adjusted earnings matched expectations, although its revenues for the quarter came in below estimates. The company reaffirmed its guidance for 2017.

Retail giant Target (TGT) announced the promotion of Rick Gomez to executive vice president and chief marketing officer, effective January 29th. Gomez will serve as a member of Target's Leadership Team.

Bristol-Myers Squibb (BMY) announced it has decided not to pursue an accelerated regulatory pathway for the combination of Opdivo plus Yervoy in first-line lung cancer based on a review of data.