The Friday Market Minute
- Global stocks slide as investors react to reports of a disappointing coronavirus drug trial and a gloomy second half outlook from a key tech company.
- Gilead's remdesivir is said to have 'flopped' in a crucial China trial, but the company insists the sample size was too small to draw conclusions.
- Intel forecast weaker-than-expected second quarter earnings and said a second recovery can't be assured.
- European leaders agree a €1 trillion rescue fund, at least in principle, but leave details of its funding and function until later in the summer.
- Wall Street futures suggest a modestly firmer open ahead of first quarter earnings from American Express and Verizon before the bell and durable goods orders at 8:30 am Eastern Time.
U.S. equity futures traded higher Friday, while the dollar surged and bond yields slipped lower, as investors continued to favor safe-haven assets following a report suggest disappointing progress in a key coronavirus treatment and sobering second-half outlook from one of the world's biggest chipmakers.
Friday sentiment was also bruised by last night's EU leaders summit, where the heads of state agreed, at least in principle, to a €1 trillion ($1.08 trillion) coronavirus rescue fund but left details as to how it will be financed -- and when it will be functional -- under later in the summer.
With reports suggesting Gilead Sciences (GILD) - Get Report nascent coronavirus treatment, remdesivir, had little success in a China-based study, and Intel Corp. (INTC) - Get Report, forecasting weaker-than-expected second quarter earnings and cautioning on a potential second-half slump, investors were in little mood to test risk markets in overnight European trading and look set to push the major indices on Wall Street lower on the final day of the trading week.
Futures contracts tied to the Dow Jones Industrial Average suggest a 97 point pullback for the 30-stock average, which has gained around 7.3% so far this month, and a 15 point bump for the broader S&P 500 benchmark.
Nasdaq Composite futures, however, are indicting only a 15 point decline as Intel's gloomy industry forecast clips gains for rival chipmakers such as Nvidia (NVDA) - Get Report, Micro Technology (MU) - Get Report and Advanced Micro Devices (AMD) - Get Report
The defensive tenor of the overnight session was also evidenced by a surge in the U.S. dollar index, which tracks the greenback against a basket of six global currencies, following the inconclusive EU leader's summit.
The dollar index gained 0.16% to trade at 100.59, while benchmark 10-year Treasury note yields slipped to 0.601% as investors pulled away from stocks heading into the weekend .
European markets were similarly affected, with losses accelerating after data from the United Kingdom showed the steepest decline in retail sales on record last month as the country's unprecedented lockdown took hold amid a surge in coronavirus infections.
The Stoxx 600 benchmark was seen 0.6% lower in mid-morning trading, lead to the downside by a 0.9% decline for the DAX performance index, while Britain's FTSE 100 slumped 1% even as the pound drifted to 1.2311 against the U.S. dollar.
Global oil prices reversed earlier declines, but still look set for their eighth weekly loss in nine, as investors looked to the market's historic over-supply, and the anticipated collapse in global demand, following perhaps the most volatile week for crude futures trading in at least 30 years.
Front-month WTI futures contracts -- the new benchmark for U.S. prices that would have owners taking delivery of crude in June -- were last seen 55 cents higher from their Thursday close in New York and changing hands at $17.05 per barrel in early European trading.
Brent futures for June delivery, which benchmark around 60% of global crude purchases, were marked 46 cents higher at $21.79 per barrel after briefly trading as low as $15.98 per barrel on Wednesday, the weakest since 1999.
Overnight in Asia, Japan's Nikkei 225 ended the week on a down note, with tech stocks leading the declines following Intel's after-the-bell earnings last night on Wall Street and pushing the benchmark 0.86% lower to 19,262.00 points.
The broader MSCI ex-Japan benchmark was also in the red, falling 0.9% into the close of trading thanks in part to notable declines for the Shanghai Composite and the South Korean KOSPI.