The Friday Market Minute

  • Global stocks rebound, with firm gains in Europe, but investors are favoring defensive assets amid heightened equity market volatility.
  • Gold tests six month highs, 10-year Japanese government bonds turn negative and the yen trades at 110.41 as investors find cover from rising market turmoil.
  • Japanese stocks slide as the yen gains in safe-haven trade, pushing the benchmark to its first annual decline since 2011.
  • European markets book solid early gains, but regional volatility index remains at February highs amid Wall Street upheaval.
  • U.S. stocks set to open modestly higher, following last night's 900-points swing into positive territory, with the VIX holding near multi-month highs at 29.6 points.

Market Snapshot

Global stocks rebounded Friday, following an extraordinary final-hour rally on Wall Street last night that saw the Dow swing nearly 900 points from its session low, even as investors quietly move into defensive assets heading into the New Year break as surging volatility rattles markets all over the world. 

Overnight Asia trading was characterized by a defensive tone, with gold edging back to it six-month high and trading at $1,2801.18 while the yen rose to 110.33 against the U.S. dollar and benchmark 10-year Japanese government bonds slipped into negative yield territory for the first time since 2017.

The moves suggest investors are prepared to park money in assets that offer little or no return in order to protect themselves from the spike in U.S. equity market volatility that's grip markets for most of the volume-thinned trading over the Christmas week.

That tone, set against some weakening economic data in both the U.S., where consumer confidence fell the most in three years, and China, where industrial profits fell for the first time since 2015, kept Japanese stocks in the red, pushing the Nikkei 0.31% lower on the final day of trading for the year, capping the first annual loss -- at 12.1% -- for the benchmark since 2011.

Stocks in China, however, managed to book modest gains on their final trading day of the 2018 year, with the Shanghai Composite rising 0.44%, on hopes of renewed stimulus from both the government and the central bank, as well as reports of solid progress in trade talks between Washington and Beijing. China stocks, however, has lost more than $2.3 trillion in value this year, with the Shanghai Composite falling 25%, its biggest decline since 2008.

U.S. equity futures are suggesting a modest advance at the opening bell on Wall Street later today, but with the CBOE's key volatility index, the VIX, trading at around 30.17 points -- just six points from the 10-month high it reached last week -- investors are braced for another day of significant moves on all three benchmarks after last night's wild ride over the final 90 minutes of trading.

Contracts tied to the Dow Jones Industrial Average I:DJI indicate a 125-point gain for the 30-stock benchmark while those linked to the broader S&P 500 I:GSPC suggest a 15.6 point bump. Contracts linked to the tech-focused Nasdaq Composite I:IXIC were marked 31.2 points to the upside. 

Tesla Inc. (TSLA) - Get Report shares jumped higher in pre-market trading Friday after naming Larry Ellison and Kathleen-Wilson Thompson to the company's board of directors.

Telsa said Ellison, the current executive chairman and chief technology officer of Oracle Corp., (ORCL) - Get Report was added to the board effective yesterday, as was Wilson-Thompson, the global head of human resources at Dow component Wallgreens Boots Alliance WBA.

Tesla shares were marked 3% higher in pre-market trading following the announcement, indicating an opening bell price of $325.48 each, a move that would bump its three-month gain to around 6% and value the Palo Alto, Calif.-based carmarker at around $56 billion.

European stocks opened firmly higher, however, with the Stoxx 600 rising 2.1% to 336.47 points by mid-day in Frankfurt, led by a 1.7% gain for the DAX performance index and a 1.6% advance for the FTSE MIB benchmark in Italy. Britain's FTSE 100 jumped 2.34% in London as the pound sputtered at 1.2680 against a weaker greenback. 

The region's key volatility gauge for bluechip stocks, the Euro Stoxx 50 Volatility index, traded at 25.69 points, the highest since February 14 and up 51.8% since the beginning of the month. 

Global oil prices were also on the march Friday, rebounding firmly in the wake of a sliding U.S. dollar, but again booking advances that were absent of any real headline driver, suggesting equity volatility has spilled over into commodities markets.

Last night, the American Petroleum Institute said U.S. crude stockpiles grew by a bigger-than-expected 6.9 million barrels to just under 450 million, a figure that, if confirmed later today by the Energy Information Administration, will likely pressure prices in the last days of a brutal quarter for global crude trading.

Brent crude contracts for February delivery, the global benchmark, were marked 11 cents higher from their Thursday close in New York and changing hands at $52.35 per barrel while WTI contracts for the same month were marked 79 cents higher at $45.40 per barrel.