US futures signaled a recovery from the steepest drop for tech stocks in five months, while the Bank of Japan’s stance on yield curve control drove the yen to its weakest level in more than a week.
(Bloomberg) — US futures signaled a recovery from the steepest drop for tech stocks in five months, while the Bank of Japan’s stance on yield curve control drove the yen to its weakest level in more than a week.
Contracts on the tech-heavy Nasdaq 100 index rose 0.5% after the underlying gauge slid more than 2% Thursday. Tesla Inc. gained 1.7% in premarket trading, paring some of its 9.7% slump on Thursday. Netflix Inc. rose 0.6% after an 8.4% drop, its worst this year.
Disappointing reports from Netflix and Tesla Inc. snapped a record run for the tech-heavy Nasdaq this week, stirring doubts over the staying power of a rally that’s been powered by a handful of megacap stocks and hype over artificial intelligence.
“Equity markets started to digest the first salvo of disappointing earnings, translating into an abrupt interruption of an otherwise stellar year for stocks,” Mizuho International Plc strategists Evelyne Gomez-Liechti and Helen Rodriguez wrote in a note.
Meanwhile, the yen tumbled as much as 1.4% and led losses among Group-of-10 currencies after a report that Bank of Japan officials see little urgent need to address the side effects of their yield curve control program at this point. The currency traded at 141.71 against the dollar, its weakest level in 11 days, amid reduced odds for a hawkish surprise at the BOJ’s policy decision next Friday.
Read more: BOJ Is Said to See Little Need to Act on Yield Control for Now
Trading on Friday may be affected by a flood of expiring options before an out-of-cycle rebalancing in the Nasdaq 100. The index shuffle, which takes effect on Monday, is designed to reduce the dominance of technology megacaps and boost the presence of smaller members.
Downbeat earnings contrast with signs of resilience in the US and UK economies that are raising doubts over whether central banks can already declare victory on their inflation battles and wind down rate-hiking cycles. On Thursday, an unexpected pullback in US jobless claims prompted higher odds of a further rate hike beyond the Federal Reserve’s meeting next week.
Equity funds had $2.1 billion of outflows in the week to July 19, while $7.5 billion went to money markets and $1.4 billion to bond funds, according to a Bank of America Corp. note citing EPFR Global data. Still, while investors distanced themselves from the broader stock market, they increased their holdings of tech stocks.
The Bloomberg Commodity Index is set for its third weekly gain, following a surge in wheat prices after an escalation of tensions between Russia and Ukraine in the Black Sea. Natural gas futures in Europe and the US are also set to notch near 10% gains this week as extreme heat boosts power demand for air conditioning.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 6:27 a.m. New York time
- Nasdaq 100 futures rose 0.5%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 rose 0.1%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro was little changed at $1.1122
- The British pound fell 0.1% to $1.2852
- The Japanese yen fell 1.2% to 141.74 per dollar
Cryptocurrencies
- Bitcoin rose 0.2% to $29,802.06
- Ether was little changed at $1,888.82
Bonds
- The yield on 10-year Treasuries was little changed at 3.84%
- Germany’s 10-year yield was little changed at 2.48%
- Britain’s 10-year yield advanced two basis points to 4.30%
Commodities
- West Texas Intermediate crude rose 1.3% to $76.65 a barrel
- Gold futures fell 0.3% to $2,004.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck, Tassia Sipahutar and Krystof Chamonikolas.
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