U.S. index futures rose in pre-market trading on Friday as investors await Federal Reserve Chair Jerome Powell’s speech, which may signal interest rate cuts. The Dow and S&P 500 have posted slight gains this week, while the Nasdaq has declined 0.1% so far, heading for its fifth weekly drop in six.
At 05:14 AM, Dow Jones futures (DOWI:DJI) were up 122 points or 0.30%. S&P 500 futures gained 0.38%, and Nasdaq-100 futures advanced 0.59%. The 10-year Treasury yield stood at 3.852%.
The U.S. economic calendar includes Jerome Powell’s speech at the Jackson Hole retreat at 10:00 AM ET, along with the July new home sales report, with a median forecast of 620,000 units compared to 617,000 in the prior period.
In commodities, West Texas Intermediate crude for October rose 1.11% to $73.82 per barrel, while Brent for October increased 1.07% to $78.05 per barrel.
Oil prices are expected to end the week lower due to weak U.S. employment data and ceasefire talks in Gaza. U.S. jobs data raised recession fears, affecting demand, while the Gaza truce eased supply concerns.
Strikes and heavy rains in Australia, the world’s third-largest raw sugar exporter, are delaying sugar harvesting and threatening exports. Workers have been on strike since May, and wet weather in Queensland is hindering field access. This could lead to lower production and disrupt the next crop planting, impacting farmers’ income.
Asia-Pacific markets closed mixed on Friday. Japan’s Nikkei 225 and Topix rose 0.4% and 0.5%, respectively, reaching highs since August 1. South Korea’s Kospi fell 0.22%. Australia’s S&P/ASX 200 dropped 0.04%, closing marginally lower after a 10-day winning streak. China’s CSI 300 gained 0.42%, while Hong Kong’s Hang Seng fell 0.1% in the final hour of trading.
In Japan, core inflation rose 2.7% in July, staying above the Bank of Japan’s (BOJ) 2% target for 28 months. However, “core-core” inflation fell to 1.9%, below the 2% target for the first time since September 2022. Additionally, the yen rose 0.5% after the BOJ confirmed potential interest rate hikes.
In Singapore, the consumer price index, excluding private road transport and accommodation costs, rose 2.5% in July from a year earlier, the smallest increase since February 2022, potentially allowing the central bank to consider easing monetary policy. This result was lower than the 2.9% forecast and June’s 2.9% rate. Overall inflation also fell to 2.4% in February, the lowest since August 2021. Inflation is expected to range from 2.5% to 3.5% in 2024.
In China, measures to control bond yields stabilized rates but caused a sharp drop in trading activity, potentially worsening the economic situation. Trading in 10-year bonds dropped 90%, and the government is cracking down on speculation, raising concerns about market stability.
To mitigate the property crisis, China’s regulator will launch a program to purchase unsold apartments and convert them into affordable housing. Additionally, the supply of public housing units will be increased when possible. The ongoing property crisis has negatively impacted the market and the economy.
In Australia, Treasurer Jim Chalmers offered concessions to the opposition to secure support for Reserve Bank (RBA) reforms, including creating a monetary policy committee and a governance board. He agreed to transfer all current members to the new committee to resolve a legislative deadlock unless they choose to move to the governance board.
European markets were advancing as investors awaited Jerome Powell’s speech at Jackson Hole. Bank of England Governor Andrew Bailey is also set to speak at the symposium later in the day. All major exchanges and most sectors were up, except for the technology sector.
Among individual stocks, shares of Melrose Industries (LSE:MRO) are down 5.9% after UBS downgraded the aerospace supplier from “Buy” to “Sell.”
Nestlé (LSE:0RR6) CEO Mark Schneider unexpectedly announced his departure and will be replaced by Laurent Freixe. The company also revised its sales forecast downward. The leadership change raised doubts about sales recovery and margin strategy.
The UK’s energy price cap will rise 10% in October to $2,251 (£1,717) due to high energy and gas prices. This increase, combined with reduced subsidies for pensioners, will intensify the cost-of-living impact. Inflation is also expected to accelerate, reaching 2.7% by the end of 2024.
The death of British tycoon Mike Lynch at age 59 in an Italian shipwreck has been confirmed. He was recently acquitted of fraud charges related to the sale of his company to Hewlett-Packard (NYSE:HPE). Lynch was known for his brilliant mind and significant contributions to the tech industry.
After an initial rally, U.S. stocks fell sharply on Thursday, pressured by profit-taking and rising bond yields. The Nasdaq plunged 1.67%, the S&P 500 fell 0.89%, and the Dow Jones dropped 0.43%.
The U.S. Department of Labor reported that initial jobless claims rose to 232,000 in the week ending August 17, above the previous week’s 228,000. Economists had predicted 230,000. The National Association of Realtors reported that existing home sales rose 1.3% in July to 3.95 million, beating expectations of 3.93 million.
In addition to the downward pressure from rising bond yields, the market was impacted by uncertainties ahead of the Jackson Hole Symposium and the expectation of interest rate cuts. Before Powell’s comments, the CME Group’s FedWatch tool indicated a 75.5% probability of a quarter-point rate cut next month and a 24.5% chance of a half-point cut.
Kamala Harris accepted the Democratic presidential nomination with a personal speech on Thursday, pledging to focus on the middle class and reproductive rights. She stood out by criticizing Donald Trump and defending her qualifications based on her experience as a prosecutor, senator, and vice president. Her speech emphasized the need to overcome political divisions and focused on protecting rights and economic opportunities.
On the quarterly earnings front, Gold Fields (NYSE:GFI), and Hafnia (NYSE:HAFN) will report on Friday.