The Friday Market Minute
- Global stocks mixed as trade and manufacturing concerns hold down markets in Asia while earnings and central bank support boost benchmarks in Europe.
- Mixed U.S. tech earnings keep investors cautious ahead of Q2 GDP data, which could help define the Fed's late July rate cut plans.
- Global oil prices edge higher as Gulf tensions continue to escalate, with Britain's HMS Montrose sent to accompany ships through the Strait of Hormuz.
- U.S. equity futures suggest modest opening bell gains on Wall Street ahead of earnings from Twitter, McDonald's and Colgate-Palmolive as well as second quarter GDP data at 8:30 am Eastern time.
U.S. equity futures bumped higher Friday as investors parsed through some mixed tech sector earnings from last night's session and awaited key second quarter GDP data that could help define the Federal Reserve's thinking as it moves towards next week's rate decision.
Google parent Alphabet Inc.'s (GOOGL) stronger-than-expected second quarter earnings, driven by surging ad sales and enhanced by a robust second half outlook, sent shares soaring more than 8% in overnight trading. The gains offset at least some of the disappointment investors found in Amazon's (AMZN) first quarterly profit miss in two years, which the online retailer cautioned would likely continue for at least a few more months as the cost of one-day shipping eats into its bottom line.
The mixed numbers define, in some ways the second quarter earnings season, which has largely surprised to the upside, but has been tempered by softer-than-expected outooks and warnings on growth, trade and demand.
Equity markets, however, are finding much more solace in the hope of near-term support from the world's biggest central banks, including the Federal Reserve, which meets next week in Washington against a backdrop of expectations for at least a 25 basis point rate cut. However, with the European Central Bank signalling a September rate cut and a potential re-start of its quantitative easing program, today's second quarter US GDP reading, which is due at 8:30 am Eastern time, will go a long in answering the market's key rate question: will the Fed be bold enough to reduce rates by 50 basis points?
Futures contracts tied to the Dow Jones Industrial Average suggest investors are prepared to wait for the GDP print before reaching for further risk and are indicating a modest 66 point opening bell gain. Contracts linked to the S&P 500 are indicating a 7.1 point advance while those tied to the Nasdaq Composite are guiding to a 72 point gain for the tech-focused benchmark.
Overnight in Asia, stocks drifted lower as investors followed Wall Street's late-session weakness and continued to fret over the worrying decline in global manufacturing activity and the lack of progress in U.S.-China trade talks.
Japan's Nikkei 225 slipped 0.45% by the close of trading in Tokyo, while the region-wide MSCI ex-Japan benchmark, the region's broadest measure of share price,s fell 0.66% into the final hours of trading.
European stocks, however, found firmer footing amid some solid blue chip earnings from Nestle (NSRGY) and Vodafone (VOD) , as well as bets that ECB policy moves would continue to support markets in the months ahead.
The Stoxx 600 Europe benchmark was last seen 0.36% higher in Frankfurt while Britain's FTSE 100 added 0.54% by mid-morning in London.
Away from equities, the U.S. dollar index edged 0.1% higher in overnight trading, while benchmark 10-year Treasury note yields held at 2.09% following Thursday's ECB-linked sell off.
Global oil prices were also higher on the session, pulling U.S. crude prices past $56 per barrel, as ongoing tensions in the Gulf region, as the British Navy deployed a warship -- the HMS Montrose -- to accompany tankers through the Strait of Hormuz following last week's seizure of a British flagged carrier by Iran in the busy shipping lane.
Brent crude contracts for September delivery, the global benchmark, were seen 18 cents higher from their Thursday close and changing hands at $63.57 per barrel while WTI contracts for the same month, which are more tightly linked to U.S. gas prices, were marked 25 cents higher at $56.27 per barrel.