US equity futures dropped after disappointing earnings from Apple Inc., Amazon.com Inc. and Alphabet Inc. poured cold water on the rally fueled by investor optimism that rates are getting close to peaking.
(Bloomberg) — US equity futures dropped after disappointing earnings from Apple Inc., Amazon.com Inc. and Alphabet Inc. poured cold water on the rally fueled by investor optimism that rates are getting close to peaking.
Positive sentiment from this week’s surge in the Nasdaq 100 and S&P 500 evaporated as investors parsed late results from the tech trio that showed an economic slowdown is throttling demand for electronics, e-commerce, cloud computing and digital advertising. Their shares slumped more than 4% each in premarket trading.
Treasury yields held Thursday’s drop and a gauge of the dollar was steady.
Investors have been cheering what they perceive as varying degrees of dovish tilts from central banks this week. Chair Jerome Powell said Wednesday the Federal Reserve had made progress in its inflation battle even as the labor-market continues to show tightness that could add to wage pressures. Payrolls data due later Friday may show the US jobs market softening, complicating the Fed’s task.
“Risk markets are buoyed by lower implied policy rates and expectations that the Fed will achieve a soft landing,” Alex Rohner, a fixed-income strategist at Bank J Safra Sarasin Ltd. wrote in a note. “This will be very hard to achieve. In fact, substantial tightening cycles such as the current one have historically led to a sharp rise in unemployment, and a recession.”
The Stoxx Europe index retreated after closing within a whisker of a bull market on Thursday, with all industry groups in the red on Friday. French drugmaker Sanofi was the biggest decliner in index-points terms after forecasting a slowdown in profit growth this year. Carmakers also weighed on the index, following US peers lower after Ford Motor Co.’s disappointing earnings report.
Asian shares were mixed, with a regional index slipping with Chinese stocks while Japanese and Australian benchmarks eked out gains.
There was no respite in the rout of Gautam Adani’s companies. All 10 of the group’s stocks fell as the Indian billionaire battles to restore confidence in his conglomerate’s financial health after accusations of fraud by short-seller Hindenburg Research. Shares of Adani Enterprises Ltd. dropped 35%, the most ever during intraday trading, before paring loss.
Elsewhere in markets, oil headed for a second weekly drop as optimism over a recovery in Chinese demand dimmed and US stockpiles kept rising.
Gold rose slightly after slumping almost 2% on Thursday as traders sold off haven assets amid renewed optimism developed nations including the US are reining in inflation.
Key events this week:
- US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.8% as of 5:47 a.m. New York time
- Nasdaq 100 futures fell 1.5%
- Futures on the Dow Jones Industrial Average fell 0.3%
- The Stoxx Europe 600 fell 0.2%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.2% to $1.0936
- The British pound rose 0.3% to $1.2260
- The Japanese yen rose 0.2% to 128.44 per dollar
Cryptocurrencies
- Bitcoin fell 0.1% to $23,431.58
- Ether rose 0.4% to $1,644.3
Bonds
- The yield on 10-year Treasuries was little changed at 3.39%
- Germany’s 10-year yield advanced six basis points to 2.14%
- Britain’s 10-year yield advanced two basis points to 3.03%
Commodities
- West Texas Intermediate crude was little changed
- Gold futures fell 0.4% to $1,923.90 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller, Garfield Reynolds and Tassia Sipahutar.
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