The Friday Market Minute
- Global stocks retreat as data shows economic activity slowed notably in January as COVID-triggered lockdowns shuttered businesses and factories.
- European PMI readings point to a double-dip recession, while UK data shows January lockdowns suffocated services at the start of the first quarter.
- Intel and IBM earnings get a sour reception in extended hours trading, while equity volatility jumps higher as stocks retreat from all-time highs.
- Oil prices slump as China prepares to extend some of its new lockdown orders, possibly into the lunar new year, following COVID spikes in Shanghai and Beijing.
- U.S. equity futures suggest a softer open on Wall Street ahead quarterly earnings from Schlumberger and Kansas City Southern as well as January PMI data at 9:45 am Eastern time.
Wall Street futures retreated from record highs Friday, while the dollar held firm and oil prices slumped, as investors reacted to a series of grim readings of economic activity around the world triggered by rising coronavirus infections and stricter lockdowns.
Europe's economy looks set for a double-dip recession following PMI data for the month of January that indicated overall activity slowed notably in the world's biggest economic bloc as Germany, France and Italy imposed travel restrictions and business closures in order to tame the pandemic.
In the U.K., the benchmark PMI gauge slumped to 40.6 points -- nearly 10 points below the mark that normally separates growth from contraction -- while a similar reading from Japan showed a sharp slump in factory activity.
US readings will come at 9:45 am Eastern time, with existing home sales data for the month of December following fifteen minutes later, but traders are already using the PMI figures as a catalyst to pull some risk from the market following yesterday's all-time highs.
Negative reaction to earnings from chipmaker Intel Corp (INTC) - Get Report and IBM (IBM) - Get Report is also weighing on sentiment, as is an overnight jump in the CBOE's key equity market volatility index, the VIX, which rose 6.5% to 23 points in extended trading.
Futures contracts tied to the Dow Jones Industrial Average suggest a 265 point opening bell slide, with those linked to the S&P 500 pricing in a 29 point retreat. The tech-focused Nasdaq is primed for an 85 point opening bell pullback.
Oil prices, too, were hit by the poor series of PMI readings, as well as plans in China to extend some of its new lockdown orders, possibly into next month's lunar new year celebrations, following new COVID outbreaks in Beijing and Shanghai.
WTI futures contracts for March delivery, the U.S. benchmark that normally dictates the direction of gas prices, was marked $1.27 lower from last night's close at $51.86 while Brent contracts for the same month, the global benchmark, fell $1.30 to $54.80 per barrel.
European stocks were notably weaker in the opening hours of trading, with the Stoxx 600 falling 1% and Britain's FTSE 100 sliding 0.85%, while pullbacks in China and Hong Kong dragged the MSCI ex-Japan index 0.9% lower heading into the final hours of trading.
Japan's Nikkei 225 closed 0.44% lower at 28,631.45 points.
Away from equities, the U.S. dollar index bumped higher as traders looks for safe-haven assets in the wake of the overnight equity sell-off, as well as the ongoing plunge in bitcoin, which has tumbled more than 11% and traded as low as $28,800 during Asia hours.