(Bloomberg) — S equity futures gained as trade tensions eased and investors stuck to bets on Federal Reserve interest-rate cuts ahead of a key inflation reading later Friday.
Contracts on the S&P 500 were up about 0.2% after a tech-led rally on Wall Street put the benchmark on track for a second weekly gain of more than 1%. Futures on the Nasdaq 100 advanced 0.4%. Shares in Intel Corp soared in pre-market trading in New York after an upbeat revenue forecast. Newmont Corp. slumped after the precious-metals miner’s guidance disappointed investors.
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With money markets pricing in a Federal Reserve rate cut next week and Treasuries set for their best monthly performance since February, investors will likely look past any evidence of stubborn inflation in Friday’s consumer price index report, which comes after a more-than-three-week data vacuum due to the US government shutdown. Treasury yields and a gauge of the dollar were steady.
“Whatever the print looks like, it won’t deter the FOMC from delivering a 25 basis-point cut next week, or at the December meeting, even if there will probably be some knee jerk volatility as the data crosses,” said Michael Brown, a senior research strategist at Pepperstone Group Ltd.
The Stoxx Europe 600 index erased gains amid mixed earnings and contrasting economic data from Germany and France, the region’s two biggest economies. While business activity in Germany surged, France’s composite purchasing managers’ index unexpectedly fell. The country’s CAC 40 stock index declined.
Among companies reporting earnings in Europe, French drugmaker Sanofi SA, UK lender NatWest Group Plc, Swiss cement producer Holcim AG and Swedish defense firm Saab AB gained after beats. Aluminum supplier Norsk Hydro ASA and Dutch lights manufacturer Signify NV dropped after missing analysts’ estimates.
The strong earnings season so far has helped markets to ride out geopolitical and trade tensions. With nearly quarter of the reporting done, year-on-year growth in earnings-per-share has been 4% in Europe and 14% in the US, better than expected, according to Barclays Plc strategists. The real test will come with big-tech results starting next week, they said. Alphabet Inc. and Meta Platforms Inc. are slated to report on Oct. 29 and Apple Inc. the day after.
“We do not think that we are out of the volatility period and market sentiment still feels fragile,” said Mohit Kumar, chief economist and strategist at Jefferies International Ltd. “Investor positioning has shown some signs of cleanup, but overall positioning still remains on the long side. Thus, we are keeping our low-risk mode for now, while maintaining our medium term bullish view.”
Trade Tensions
Market sentiment was helped by a White House announcement that President Trump will meet his Chinese counterpart Xi Jinping, a chance for cooler heads to prevail after a recent flare-up in trade tensions. The two leaders will talk next Thursday on the sidelines of the Asia-Pacific Economic Cooperation summit, their first face-to-face meeting since Trump returned to power.
“The confirmation of a Xi–Trump meeting gave markets a clear reason for a relief rally today,” said Hebe Chen, an analyst at Vantage Markets in Melbourne. “Not from hopes of warmer U.S.–China relations ahead, but from the perception that any progress is better than stalemate, and that a new deal before the truce deadline now appears more attainable.”
Other trade conflicts continue to simmer, however. Trump halted all tariff negotiations with Canada, citing a Canadian advertisement against his signature tariffs plan featuring the voice of former President Ronald Reagan. Canadian bonds fell and the currency weakened.
Brent crude oil held above to $65 a barrel after rallying more than 5% as US President Donald Trump imposed sanctions on Russian producers. Gold is set to snap a nine-week winning run, following a sharp correction as the market reassessed a rally that had pushed the metal into overbought territory. Bullion slipped below $4,100 an ounce on Friday, putting it on track for a weekly decline of more than 3%, the most since May.
WATCH: Bloomberg’s Skylar Montgomery Koning breaks down today’s key themes for analysts and investors.
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Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.1% as of 10:25 a.m. London time
S&P 500 futures rose 0.3%
Nasdaq 100 futures rose 0.5%
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index rose 0.4%
The MSCI Emerging Markets Index rose 0.5%
Currencies
The Bloomberg Dollar Spot Index rose 0.1%
The euro was little changed at $1.1610
The Japanese yen fell 0.3% to 152.96 per dollar
The offshore yuan was little changed at 7.1252 per dollar
The British pound was little changed at $1.3321
Cryptocurrencies
Bitcoin rose 1.7% to $111,434.92
Ether rose 3.6% to $3,967.16
Bonds
The yield on 10-year Treasuries was little changed at 4.01%
Germany’s 10-year yield advanced three basis points to 2.62%
Britain’s 10-year yield was little changed at 4.43%
Commodities
Brent crude fell 0.2% to $65.89 a barrel
Spot gold fell 1.4% to $4,069.69 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu and Elizabeth Stanton.
