In a week marked by turbulence in financial markets, US Stock futures experienced a rebound as Amazon.com Inc. and Intel Corp. reported robust earnings, dispelling some of the gloom that had settled after mixed reports from other big-tech companies. Meanwhile, crude oil prices surged following US strikes on Iran-linked facilities in Syria.
Scenario after the selloff
Nasdaq futures saw a notable 0.8% increase after a recent selloff had pushed the index to its lowest point since May. This decline also pushed the S&P 500 to the brink of a “correction,” with the index nearly 10% down from its peak in July. In premarket trading on Friday, Intel’s stock jumped by 7.8%, and Amazon’s shares were up by 4.8%.
The ongoing earnings season has proven to be a mixed bag, with investors penalizing companies that miss expectations more severely than they reward those that beat them. In the US, 78% of companies reporting earnings have beaten estimates, in contrast to 57% in Europe, according to strategists at JPMorgan Chase & Co. However, an increasing number of companies are signaling lower consumer demand and a deteriorating economic environment, even as data released on Thursday indicated that inflationary pressures in the US are receding, despite solid economic growth.
Solidifying Expectations
Investors are now closely watching a slew of reports, including the Federal Reserve’s preferred measure of underlying inflationary pressures, in order to solidify expectations that the central bank will pause its rate hikes in the upcoming week. Additionally, market participants will keep an eye on earnings announcements from major oil companies, such as Exxon Mobil Corp. and Chevron Corp.
Hebe Chen, an analyst at IG Markets in Melbourne, remarked on the resilience of US growth and earnings beats by some tech giants, stating that this has brought “long-awaited relief for stressed investors.” She also noted that as the end of the month approaches, investors are holding their breath for next week’s Federal Open Market Committee (FOMC) meeting, which is expected to set the tone for the remainder of the year.
Crude Oil Gains On Large US Stock Drawdown & Supply Concerns Due To Israel-Hamas Conflict
Stoxx Europe 600 index
In contrast to the positive sentiment in the US Stock Futures, the Stoxx Europe 600 index declined further as corporate earnings continued to disappoint. Notably, French pharmaceutical company Sanofi saw its stock drop by as much as 16% following an earnings miss and a downbeat outlook. UK lender NatWest Group Plc also faced a decline after reducing its margin guidance. Universal Music Group NV, the record label for artists like Taylor Swift, saw its shares decrease after falling short of some estimates. On a brighter note, energy majors saw gains as Brent crude oil prices surged by more than 1% to surpass $89 a barrel.
Bloomberg Data
Across Asia, shares in Hong Kong and Japan led the way in advancing, while Australian and South Korean stocks also traded in positive territory. Mainland Chinese shares saw a slight uptick after data on industrial companies’ profits showed growth, albeit at a slightly slower rate than in the previous period.
In the realm of currencies and bonds, Treasury yields rose slightly, and the US dollar remained steady. Swap contracts suggested a roughly one-in-three chance of another Federal Reserve rate hike in the current tightening cycle, according to data compiled by Bloomberg.
The Japanese yen showed stability after Tokyo inflation unexpectedly accelerated, indicating some consumer cost pressures. Japanese Finance Minister Shunichi Suzuki reiterated that officials are closely monitoring currency movements with a high sense of urgency.
