Global equity momentum fizzled on Friday, with European stocks opening near flat and US futures in the red after a grim quarterly forecast from chipmaker Intel Corp. dampened some of the market optimism stemming from better-than-expected US economic data and bullish bets on China.
(Bloomberg) — Global equity momentum fizzled on Friday, with European stocks opening near flat and US futures in the red after a grim quarterly forecast from chipmaker Intel Corp. dampened some of the market optimism stemming from better-than-expected US economic data and bullish bets on China.
Europe’s equity benchmark, the Stoxx 600, failed to build on its 0.4% gain from Thursday, while US equity futures shed around 0.3% after a strong session amid disapppointment over Intel giving one of the gloomiest quarterly forecasts in its history.
Earlier, Asian stocks advanced for a sixth straight day, buoyed by fresh gains in Hong Kong-listed technology stocks.
Before the Intel report on Thursday, the S&P 500 index achieved its highest close in more than a month and the Nasdaq 100 rose 2% to a four-month high. US stocks are on track for their best month since July, while the Stoxx index has gained almost 7% so far as investors have bet the Federal Reserve will pivot to cutting rates by year-end.
Kathryn Rooney Vera, head of global macro research at Bulltick LLC described this month’s rally as “a recovery trade before recession has even occurred.”
“US S&P 500 valuations are not attractive. At this point we are defensively positioned on the US,” she said on Bloomberg Television.
More warning signs include a report that Japan and the Netherlands could join the US in limiting China’s access to advanced semiconductor machinery. Stocks linked to Indian billionaire Gautam Adani, plunged as much as 20%, extending losses ignited by an explosive research report from short-seller Hindenberg earlier this week. The rout pushed India’s NSE Nifty 50 Index more than 1% lower, on course for the lowest since October.
Currency and bond markets meanwhile reacted to data showing US gross domestic product expanded at a faster-than-forecast pace into the end of 2022. The dollar gained for the second day against Group-of-Ten rivals, while Treasury yields rose about three basis points.
The data dampened conviction among some investors that the US Federal Reserve would cut interest rates by year-end. Such hopes may end up being frustrated, according to Erick Muller, head of product and investment strategy at Muzinich & Co. Ltd. who said calling rate cuts now is “a step too far.”
“On Feb 1 we will probably see the Fed say ‘we are entering the final phase but listen carefully guys: we will continue to raise rates,” Muller said. “A lot of volatility in rates will depend on the path of inflation from here.”
Investors could get some clues on the outlook for prices from the upcoming US PCE core deflator index and the University of Michigan’s inflation expectations survey.
Earlier, Tokyo inflation figures at the highest since 1981 heaped pressure on the Bank of Japan to pare stimulus. The yen ceded initial gains versus the dollar, though Japan’s 10-year bond yield edged higher, back toward the BOJ’s 0.5% ceiling.
Elsewhere in markets, oil rose on the back of optimism over Chinese demand. Gold slid.
Key events:
- American Express, Charter Communications, Chevron, HCA Healthcare to report results Friday
- US personal income/spending, PCE deflator, University of Michigan consumer sentiment, pending home sales, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.1% as of 8:44 a.m. London time
- S&P 500 futures fell 0.3%
- Nasdaq 100 futures fell 0.6%
- Futures on the Dow Jones Industrial Average fell 0.1%
- The MSCI Asia Pacific Index rose 0.3%
- The MSCI Emerging Markets Index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0886
- The Japanese yen rose 0.3% to 129.87 per dollar
- The offshore yuan fell 0.3% to 6.7597 per dollar
- The British pound fell 0.3% to $1.2373
Cryptocurrencies
- Bitcoin fell 0.3% to $23,011.59
- Ether fell 1.3% to $1,582.95
Bonds
- The yield on 10-year Treasuries advanced four basis points to 3.53%
- Germany’s 10-year yield advanced four basis points to 2.26%
- Britain’s 10-year yield advanced three basis points to 3.34%
Commodities
- Brent crude rose 0.8% to $88.13 a barrel
- Spot gold fell 0.2% to $1,925.84 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson, Matthew Burgess and Tassia Sipahutar.
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