US equity futures were mixed on Friday, as bank earnings season began and traders weighed bets the Federal Reserve could be nearing the end of its rate-hiking cycle.
(Bloomberg) — US equity futures were mixed on Friday, as bank earnings season began and traders weighed bets the Federal Reserve could be nearing the end of its rate-hiking cycle.
Contracts on the Nasdaq 100 extended a loss to 0.5% after the underlying benchmark rose about 2% the previous day. Those on the S&P 500 were steady after the underlying gauge had climbed the most this month Thursday, following softer US factory-gate inflation and a rise in the number of Americans claiming jobless benefits. MSCI Inc.’s World Index rose for a second day, having touched the highest in more than 10 weeks.
“What I see is that the market is seeing bad news as good news, so any sign of slowdown in the economy is expected to bring down inflation and force central banks to cut rates. That’s the narrative at the moment and hence the positive sentiment,” said Flavio Carpenzano, investment director at Capital Group in London.
Meanwhile, JPMorgan Chase & Co. and Well Fargo kicked off a busy earnings season. JPMorgan jumped about 8% in the premarket after reporting first-quarter deposits unexpectedly rose. Wells Fargo fell about 1% in the premarket after the lender increased provisions for credit losses for commercial real estate loans among others.
As bond traders added to wagers the Federal Reserve will cut interest rates by end-2023, Treasury yields slipped, with the rate-sensitive two-year segment holding below 4%. Meanwhile, a Bloomberg gauge of the dollar steadied after droping to the lowest since February.
Rate cut wagers could be boosted further if US March retail sales data later in the day show slowing demand for goods and services. But an even bigger pressure point could be the start of earnings season, with big banks’ first-quarter reports in greater focus than usual, given the failure in March of three smaller US lenders.
“Investors will remain wary of any indication that the regional banking turmoil has translated into materially tighter lending standards throughout the system,” BMO strategists Ian Lyngen and Benjamin Jeffery wrote in a note.
A key focus will be the deposit drain, especially at Western Alliance Bancorp, Comerica Inc. and East West Bancorp Inc., whose stocks were were hard hit by the collapses. These will report earnings next week.
In US premarket trading, shares in Boeing Co. fell as much as 5% after the firm said it was pausing deliveries of some 737 Max jets to address a production issue on some aircraft.
In commodities, crude headed for a fourth week of gains amid signs of a tightening global market and a weaker dollar.
Key events this week:
- US retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
- Major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday
Some of the main market moves:
Stocks
- S&P 500 futures were little changed as of 7:12 a.m. New York time
- Nasdaq 100 futures fell 0.5%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 rose 0.6%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1051
- The British pound fell 0.2% to $1.2501
- The Japanese yen fell 0.1% to 132.74 per dollar
Cryptocurrencies
- Bitcoin rose 1.8% to $30,818.88
- Ether rose 5.4% to $2,116.39
Bonds
- The yield on 10-year Treasuries advanced one basis point to 3.45%
- Germany’s 10-year yield was little changed at 2.37%
- Britain’s 10-year yield was little changed at 3.58%
Commodities
- West Texas Intermediate crude rose 0.4% to $82.47 a barrel
- Gold futures fell 0.2% to $2,052 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar.
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