US Equity Futures and Global Markets Surge, Eyeing All-Time Highs
US equity futures indicate further gains
US equity futures are suggesting more gains on the final day of trading, putting the S&P 500 on track for a third consecutive weekly increase — its longest streak since February. The rally was fueled yesterday by a combination of increased earnings optimism and disappointing economic data. The latter, which included the highest initial jobless claims since last August, bolstered the argument for Federal Reserve rate cuts. However, the real test will be next week's key US inflation data. As of 8:00am, S&P 500 futures were up by 0.3% after the index closed less than 1% away from its all-time high, with Nasdaq futures rising 0.4%. European stocks were also up 0.9%, set for a new record high, with Asian stocks following suit. Treasuries and the dollar remained flat; earlier on Friday, the yuan weakened on news that Biden’s administration is set to announce a decision on new China tariffs as early as next week.
Premarket trading sees mixed results
In premarket trading, 3M Co. rose 1.2% after HSBC upgraded its recommendation to buy from hold. The bank noted signs of an “inflection in growth and margin gains from restructuring” at the manufacturing giant. However, Akamai fell 10% after its forecast for adjusted earnings per share for the second quarter missed the average analyst estimate. Analysts noted weakness in the infrastructure software company’s content-delivery network business. Other notable premarket movers included Bumble, CRH, Dutch Bros, Ginkgo Bioworks, JFrog, MacroGenics, Natera, Novavax, Progyny, SoundHound AI, Sweetgreen, Unity Software, and Yelp.
Rebound in stocks gains momentum
The rebound in stocks gained fresh momentum from very poor US unemployment claims on Thursday, which supported the case for rate cuts before next week’s key US inflation data. Meanwhile, so-called value and cyclical sectors are helping to broaden out a rally that had been fueled by tech giants. Traders will be watching for hints on the timing of policy easing from Fed officials including Michelle Bowman and Neel Kashkari before next week’s CPI data.
European stocks set for best week since January
European stocks are set for their best week since the end of January on a slew of better-than-expected earnings reports and growing confidence that interest rate cuts are still possible this year. The Stoxx 600 rose 0.9% to a record high with mining, utility, and construction shares leading gains.
Asian stocks track gains in the US
Asian stocks tracked the gains in the US where a rise in initial jobless claims spurred a dovish reaction. Hang Seng & Shanghai Comp traded mixed with Hong Kong stocks surging on reports China is considering a proposal to exempt individual investors from paying dividend taxes on Hong Kong stocks bought via the Stock Connect, while the mainland faded its initial gains with the US reportedly set to impose tariffs on China EVs and key sectors after a review which could be announced as soon as next week. Nikkei 225 rallied at the open but then slipped from intraday highs with participants reflecting on Household Spending data, US-China and tensions and amid a busy day of earnings releases for Japan. ASX 200 was led by energy, telecoms and financials but with gains capped amid mixed consumer stocks.
Conclusion
The surge in US equity futures and global markets is a clear indication of growing investor optimism. The potential for Fed rate cuts, coupled with disappointing economic data, seems to have given the rally fresh legs. However, the real test will come with next week's key US inflation print. What are your thoughts on these developments? Do you think this momentum will continue? Share this article with your friends and sign up for the Daily Briefing, which is delivered every day at 6pm.
