US pre-open: Foreign central banks boost stocks

US equity futures were pointing to large gains at the start of trading, following a surprise interest rate cut in China and very dovish remarks from the European Central Bank’s president, Mario Draghi.

That came despite the fact that trading had been expected to remain relatively tame ahead of the Thanksgiving Day holiday Stateside, next week.

Late on Friday morning China’s central bank reduced its one-year benchmark lending rate by 40 basis points to 5.6% to lift an economy which was on course for its slowest rate of annual growth in more than two decades.

For his part, speaking earlier in the day in Frankfurt Draghi said “We will continue to meet our responsibility — we will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us.”

The upcoming OPEC meeting on 27 November was also a talking point ahead of the ‘opening bell’. Analysts at BNP Paribas and Commerzbank do expect the cartel of oil producing nations to cut its output levels.

Acting as a backdrop, the most recent news-flow continued to point towards tensions in Ukraine. NATO officials have accused Russia of moving heavy weaponry into parts of Ukraine controlled by rebel groups loyal to Moscow.

In parallel, talks between Iranian delegates and six world powers in Vienna have yet to produce a breakthrough ahead of the deadline which is now just four days away. The western powers are asking the Middle Eastern country to significantly reduce the amount of uranium which it enriches, with Tehran holding out for a full lifting of the economic sanctions which have been placed on it.

No major economic releases were scheduled for release on Friday. Of possible interest nevertheless, in a research note e-mailed to clients Barclays Research said that while it still sees the Fed raising rates in June it now sees the risks tilted towards September, rather than March.

Front month West Texas crude futures were rising by 1.85% to $77.27 per barrel on the NYMEX.

US 10-year Treasury yields were edging higher by one basis point to 2.34%.