The Friday Market Minute
- Global stocks book their second consecutive week decline amid concerns over growth prospects in China and the pace of the U.S. recovery.
- Indebted property developer China Evergrande continues to rattle investors in Asia as it faces $150 million in coupon payments later this month.
- Record inflows into U.S. big caps providing some support Friday, but next week’s Fed meeting expected to be major market catalyst.
- Friday brings ‘Quadruple Witching Hour’ to Wall Street with the quarterly expiration of futures and options on indices and futures and options on single stocks.
- U.S. equity futures suggest a lower open on Wall Street ahead of consumer sentiment data at 10:00 am Eastern time.
Wall Street futures slipped lower Friday, while world stocks looked set to book their second consecutive weekly decline, and investors remain focused on slowing growth and financial risk in China and the Delta variant impact of the global economic recovery.
Asia stocks notched a modest rebound Friday, but remain red for the week amid data showing a notable slowdown in China, concerns over Beijing’s corporate crackdown and speculation that deeply-indebted property developer China Evergrande may trigger systemic risk to the regional’s financial markets.
In the U.S., a stronger-than-expected reading for August retail sales, as well as continued equity market inflows — including a record $28.3 billion into big cap funds this week, according to Bank of American ‘Flow Show’ data – – has provided some support for stocks ahead of next week’s Federal Reserve policy meeting, but with Friday’s quadruple witching hour — where futures and options on stocks and indices expire simultaneously — expected to bring late-hour volatility, pre-market trading remains relatively muted in terms of trading volumes.
Futures contracts tied to the Dow Jones Industrial Average are indicating an 80 point opening bell dip while those linked to the S&P 500 are priced for a 13.5 point move to the downside. Nasdaq Composite futures are set for a 45 point fall as benchmark 10-year note yields rise to 1.341% in overnight trading.
U.S. Steel Corp (X) – Get United States Steel Corporation Report shares were an active pre-market mover, falling 1.6% after the group forecast record third quarter profits and unveiled plans for a new $3 billion mill that will start producing in 2024.
Pfizer (PFE) – Get Pfizer Inc. Report shares were also in focus, rising 0.1% to $44.50 each, as the Vaccines and Related Biological Products Advisory Committee to the Food & Drug Administration debates approval of a booster shot for its two-dose ‘Comirnaty’ coronavirus vaccine.
In other markets, oil prices slipped from near two-month highs on demand concerns and profit-taking, but traders remain wary of the slow return to production for Gulf drillers and refiners following damage and evacuations linked to Hurricanes Nicholas and Ida.
WTI futures for October delivery fell 50 cents from last night’s close to trade at $72.11 per barrel while Brent contracts for November fell 29 cents to $75.38 per barrel.
European stocks got an early boost from Britain’s plans to ease COVID-linked travel restrictions, but those gains faded as U.S. futures began to drift lower, pulling the Stoxx 600 into a 0.18% decline by early afternoon in Frankfurt.
Overnight in Asia, Japan’s Nikkei 225 closed 0.58% higher at 30,500.05 points amid speculation that outgoing Prime Minister Yoshihide Suga’s replacement will be appointed in the coming weeks.
The region-wide MSCI ex-Japan index bumped 0.3% higher on the session, thanks in part to gains in Shanghai and Shenzen, although China Evergrande shares hit a fresh seven-year low in Hong Kong trading Friday to close at HK$2.54 each, extending their 2021 slump to around 83%.