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Top 5 Things to Know in the Market on Thursday

Investing.com - Here are the top five things you need to know in financial markets on Thursday, Dec. 27:

1. U.S. stock rally set to fizzle

Buying enthusiasm faded on Thursday as political uncertainty in the U.S. and unresolved trade tensions returned to dominate markets. Volatility was in full swing as the worst Christmas Eve ever in U.S. stocks was replaced by a record 1,000-point surge in the Dow a day after the Christmas holiday. But that optimism fizzled as U.S. futures pointed to a lower open on Thursday: At 5:56 AM ET (10:56 GMT), the blue-chip Dow futures fell 382 points, or 1.67%, S&P 500 futures lost 41 points, or 1.65%, while the Nasdaq 100 futures traded down 123 points, or 1.97%.

Asia markets managed to follow Wall Street’s enthusiasm overnight with Japan’s Nikkei 225 leading advancers with a 3.8% rise at the close. However, China’s Shanghai Composite was a notable exception as disappointing economic data, amid continuing concerns over U.S.-Sino trade relations, weighed on stocks.

Although European shares started the day in the green, enthusiasm quickly faded by midday. The pan-European Euro Stoxx 50, Germany’s DAX and London’s FTSE 100 were all down around 1% as investors returned from the Boxing Day holiday.

2. U.S. government shutdown enters sixth day

Investors maintained little hope for a resolution to the partial government shutdown as U.S. President Donald Trump grappled with Congress over $5 billion in funding for the southern border wall.

Trump reiterated the need for border security while visiting troops Wednesday at the Al Asad Air Base in Iraq. “The American public is demanding a wall,” he insisted.

The U.S. Senate reconvenes on Thursday, though no schedule had been issued, while little is expected from the House as Democrats prep to take over on Jan. 3. Democratic chief Nancy Pelosi is expected to become the House speaker and has promised that the chamber will pass a spending bill designed to reopen the government without funding for the border wall.

3. Jobless claims and consumer confidence on tap despite shutdown

Although the U.S. Department of Commerce's Bureau of Economic Analysis and Census Bureau will not publish economic data during the ongoing partial government shutdown - meaning that November new homes sales data originally slated for Thursday will not be released - the Labor Department is still expected to publish weekly jobless claims at 8:30 AM ET (13:30 GMT).

With the U.S. labor market showing strength, attention will likely focus on the Conference Board’s consumer confidence for December, due at 10:00 AM ET (15:00 GMT). Consensus is looking for the index to dip to 133.7 from the prior 135.7 in what would be its weakest reading in four months.

Ahead of the data, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.33% at 96.26.

4. Oil slumps as investors worry over U.S. inventories

Oil prices slumped on Thursday after an 8% surge a day earlier as investors prepared for weekly data on U.S. crude stockpiles.

The American Petroleum Institute's inventory data is due later on Thursday, while the government's Energy Information Administration (EIA) will release its report on Friday, amid expectations for a stock draw of 2.7 million barrels. If confirmed, that would mark the fourth consecutive decline.

The reports come out later than usual due the Christmas holiday.

U.S. crude oil futures lost 2.27% to $45.55 at 6:10 AM ET (10:10 GMT), while Brent oil fell 2.42% to $53.95.

Read more: Commodities 2018 Review: Tweets To Murder Accompany Boom-To-Bust Markets -Barani Krishnan

5. More worrying signs from China

China’s industrial profits fell for the first time since December 2015, according to data released on Thursday.

Trade tensions between Beijing and Washington have pressured manufacturing activity in the world’s second largest economy and economists expect factory output to suffer its first contraction since July 2016.

China and the U.S. have made plans for face-to-face consultations over trade in January, the Chinese commerce ministry said on Thursday as reported by Reuters.

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