US Futures Stable as Traders Await Bank Earnings: Markets Wrap

(Bloomberg) — US stock futures stabilized after a tech-led selloff on Wall Street, with traders now awaiting the next batch of price data as well as earnings reports from some of the biggest banks.

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Contracts on the S&P 500 and Nasdaq 100 were little changed. The Nasdaq plunged 2.2% on Thursday as inflation data supported the case for Federal Reserve interest rate cuts, driving a rotation out of the tech megacaps that have powered the bull market in stocks.

Treasury yields were steady after the prospect of lower US interest rates had sent 10-year yields seven basis points lower to 4.21% in the prior session. A gauge of the dollar held near a five-week low after falling Thursday by the largest margin since May.

Despite the latest setback, global stocks are set for their sixth weekly advance, the longest stretch since March, as Fed easing bets aid overall risk sentiment. The US inflation data prompted traders to fully price in a rate cut in September and at least two by year-end.

Fed Bank of Chicago President Austan Goolsbee described the CPI data as “excellent,” saying the report provided the evidence he’s been waiting for to be confident the central bank is on a path to its 2% goal. Producer price data later Friday will add to the picture, while investors will also eye earnings reports from Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co.

The Stoxx Europe 600 index rose for a third day, with only one industry sector — technology — in the red as chip makers including ASML Holding NV and ASM International NA followed US peers lower. Telecom stocks led the advance, with Swedish network-equipment maker Ericsson AB surging more than 6% after reporting results that beat analysts’ expectations.

Meanwhile, the yen slipped in choppy trading on Friday as the positive impact of suspected intervention and rate checks by Japanese authorities began to fade.

“Now they’ve shown their hand and they’ve intervened, they kind of have to continue to intervene just to maintain the credibility of that intervention,” Adarsh Sinha, co-head of Asia FX & Rates strategy at BofA Securities, said on Bloomberg Television regarding Japan’s finance ministry. “It’s still a tough task.”

Chinese equities trading in Hong Kong were on pace for their best day in three weeks, supported by some expectations of policy support from the upcoming Third Plenum on the mainland. A gauge of Chinese property developers jumped as much as 6.3%.

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In key Asia data, China’s trade surplus soared to the highest since at least 1990 in June, as exports jumped more than expected while imports unexpectedly weakened. Other reports due Friday include Japan industrial output and Indian inflation. China money supply and new loans data may also be released as soon as Friday.

Oil climbed for a third day on signs of stronger demand, and signals the Federal Reserve is getting close to its much-anticipated pivot. Gold fell after a sharp rally on Thursday.

Key events this week:

• University of Michigan consumer sentiment, US PPI, Friday

• Citigroup, JPMorgan and Wells Fargo’s earnings, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.2% as of 8:17 a.m. London time

• S&P 500 futures were little changed

• Nasdaq 100 futures fell 0.2%

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index fell 0.7%

• The MSCI Emerging Markets Index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0865

• The Japanese yen fell 0.3% to 159.24 per dollar

• The offshore yuan fell 0.1% to 7.2779 per dollar

• The British pound was little changed at $1.2914

Cryptocurrencies

• Bitcoin fell 0.5% to $57,246.98

• Ether fell 0.7% to $3,094.32

Bonds

• The yield on 10-year Treasuries was little changed at 4.22%

• Germany’s 10-year yield advanced four basis points to 2.50%

• Britain’s 10-year yield advanced five basis points to 4.12%

Commodities

• Brent crude rose 0.6% to $85.90 a barrel

• Spot gold fell 0.5% to $2,402.75 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Charlotte Yang.

(Updates with upcoming earnings; an earlier version corrected the description of US core CPI.)

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