US equity futures fell with stocks, as a rally in tech stocks lost steam and persistent inflationary pressures cemented expectations of further interest rate hikes in the US and Europe. Treasuries advanced.
(Bloomberg) — US equity futures fell with stocks, as a rally in tech stocks lost steam and persistent inflationary pressures cemented expectations of further interest rate hikes in the US and Europe. Treasuries advanced.
Contracts on the S&P 500 and the Nasdaq 100 slipped as Amazon.com Inc.’s warning after the market close on growth in its key cloud computing business soured the mood. Treasuries recouped some of Thursday’s losses, with the 10-year benchmark yield falling about five basis points. The policy-sensitive two-year rate remained above 4%.
Read more: Amazon Jolts Investors With Talk of Cloud Growth Slowdown (1)
Markets remain on edge, as data showing a surprise increase in US inflation pressures reinforced expectations of a Federal Reserve interest rate hike next week, and possibly in June. A growth rebound in France and a forecast-beating expansion in Spain have fanned hopes Europe can avert a recession, but an uptick in consumer-price gains points to more rate increases by the European Central Bank, which also meets next week.
Declines in Europe’s Stoxx 600 equity benchmark were led by lenders, with the Stoxx 600 Banks Index posting its biggest drop in a month on resurgent inflation.
“What looks like sticky contemporaneous inflation remains an issue, preventing the market from getting too carried away on the rate-cutting phase to come in subsequent quarters,”’ wrote Padhraic Garvey, head of global debt and rates strategy at ING Financial Markets.
Analysts at Berenberg said equities’ strong year-to-date gains had been driven by resilient earnings and receding pessimism on economic growth, but “risks are skewed to the downside over the coming months, with headwinds from tighter policy, margin headwinds and US recession.”
On Thursday, US equities enjoyed the biggest daily gain since January, thanks to solid earnings from technology firms, including Meta Platforms Inc. and Intel Corp. That was before the Amazon warning and disappointing results from Snap Inc. and Pinterest.
Read more: Snap Shares Set for Biggest Drop in Six Months After Sales Fall
The Bank of Japan, by contrast, renewed its commitment to stimulus. It left its short-term policy rate at minus 0.1% in the first meeting under new governor Kazuo Ueda, maintained its 0.5% ceiling for 10-year bond yields and launched a policy review that may take one-and-a-half years.
Japanese stocks surged as much as 1.5% while the yen tumbled 1.6% lower versus the dollar. The greenback gained against a basket of Group-of-10 currencies.
Elsewhere, oil prices headed for a sixth straight monthly decline, weighed down by slowdown concerns in the US and Asia.
Here are some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.4% as of 7:02 a.m. New York time
- Nasdaq 100 futures fell 0.2%
- Futures on the Dow Jones Industrial Average fell 0.4%
- The Stoxx Europe 600 fell 0.3%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.5%
- The euro fell 0.4% to $1.0984
- The British pound fell 0.3% to $1.2463
- The Japanese yen fell 1.6% to 136.06 per dollar
Cryptocurrencies
- Bitcoin fell 1.3% to $29,262.06
- Ether fell 0.5% to $1,910.37
Bonds
- The yield on 10-year Treasuries declined four basis points to 3.48%
- Germany’s 10-year yield declined eight basis points to 2.38%
- Britain’s 10-year yield declined five basis points to 3.75%
Commodities
- West Texas Intermediate crude rose 0.4% to $75.05 a barrel
- Gold futures fell 0.3% to $1,993 an ounce
This story was produced with the assistance of Bloomberg Automation.
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