US futures and European stocks wavered amid mixed corporate earnings and as traders parsed the latest data for clues on the outlook for inflation, economic growth and the Federal Reserve’s Policy path.
(Bloomberg) — US futures and European stocks wavered amid mixed corporate earnings and as traders parsed the latest data for clues on the outlook for inflation, economic growth and the Federal Reserve’s Policy path.
Futures on the S&P 500 and Nasdaq 100 edged lower after yesterday’s losses on Wall Street, with investors awaiting purchasing managers’ index data for the world’s biggest economy later Friday. Recurring claims for US unemployment benefits jumped to the highest level since November 2021, a report showed Thursday, adding to signs the labor market is beginning to cool.
Still, Federal Reserve Bank of Cleveland President Loretta Mester signaled support for another rate hike to quell inflation while flagging the need to watch recent bank stress that may crimp credit and damp the economy. Her Dallas counterpart Lorie Logan said inflation has been “much too high,” while outlining measures to watch.
“We are in the camp of US recession in the second half, and expect data to weaken going forward,” said Mohit Kumar, a strategist at Jefferies International Ltd.. “Once the last Fed hike is done in May, the market will start to focus on the weak economic data and bad data will become bad news; seasonality starts to turn in May, with May and June poor months for risky-asset performance.”
The 10-year Treasury yields dipped. A gauge of the dollar edged higher, heading for its first weekly gain in six weeks. The yen outperformed as signs of worsening ties between the US and China spurred traders to buy the haven currency before the weekend.
The Stoxx Europe 600 index was little changed after PMI’s for the euro area showed resilient service-sector activity, but a further decline in manufacturing orders. Mining stocks lagged as iron ore fell to the lowest since December, with Rio Tinto Plc down more than 4%. SAP AG, Europe’s biggest software company, advanced after forecasting profit ahead of analyst’s estimates. EssilorLuxottica SA, the French-Italian owner of Ray-Ban, soared after its sales jumped.
European Central Bank Vice President Luis de Guindos said Friday that underlying inflation in the euro area remains “very sticky.” The ECB is widely expected to increase its deposit rate at its next policy meeting on May 4, with the choice likely to be either a quarter- or half-point step. Meanwhile, Federal Reserve officials backed another rate increase as they monitor economic fallout from bank strains.
Meanwhile, US President Joe Biden aims to sign an executive order in the coming weeks that will limit investment in key parts of China’s economy by US businesses, people familiar with the internal deliberations said. The move is another measure in the years-long economic campaign against China.
“It’s just the next step in a long line of such restrictions that adds to underlying tension between the US and China, raises the cost of trade, and moves the world further away from peak globalization,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney.
In other markets, oil steadied after dropping by the most in more than a month on Thursday, wiping out almost all of the gains stemming from OPEC+’s output cut on signs of a global economic slowdown. Gold dipped below $2,000 an ounce.
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.1% as of 6:29 a.m. New York time
- Nasdaq 100 futures fell 0.2%
- Futures on the Dow Jones Industrial Average fell 0.1%
- The Stoxx Europe 600 was little changed
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0964
- The British pound fell 0.4% to $1.2389
- The Japanese yen rose 0.3% to 133.80 per dollar
Cryptocurrencies
- Bitcoin fell 0.3% to $28,115.43
- Ether fell 0.7% to $1,924
Bonds
- The yield on 10-year Treasuries was little changed at 3.53%
- Germany’s 10-year yield advanced one basis point to 2.46%
- Britain’s 10-year yield declined three basis points to 3.73%
Commodities
- West Texas Intermediate crude fell 0.2% to $77.25 a barrel
- Gold futures fell 1% to $1,999.50 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael G. Wilson, Richard Henderson and Sujata Rao.
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