The Friday Market Minute

  • Global stocks ease from recent highs amid questions over tariff rollbacks in U.S. China trade talks.
  • Reports suggest Washington uneasy about reducing China tariffs as October trade surplus rises to $26.42 billion in October from $25.88 billion in September.
  • European markets ease, despite stronger-than-expected German export data, pulling Stoxx 600 from recent four-year highs.
  • Benchmark 10-year Treasury bonds yields fall from yesterday's multi-month highs, but upward bond market pressures continue in markets around the world.
  • Wall Street futures suggest modest opening bell gains ahead of University of Michigan consumer sentiment data at 10:00 am Eastern Time.

Market Snapshot

Wall Street futures pared gains Friday, while global stocks eased from recent multi-year highs, as investors cashed out of the recent equity market rally amid questions over whether tariff rollbacks will be a key element in the potential phase one trade agreement between Washington and Beijing.

Trade sentiment remains a powerful force in global markets, with reports of a potential deal between the U.S. and China driving markets to record highs this week, but concurrent suggestions that the White House is balking at reducing existing tariffs on China-made goods overshadowing stronger-than-expected economic data and further signals of market strength in the weeks ahead.

China said its October exports fell by a less-than-expected 0.9%, a slide that marks the third month of contraction as overseas sales are hammered by U.S. tariffs and softening demand. However, the improving backdrop, as well as data showing Germany's exports rose the most in more than two years last month, suggests global trade is starting to show signs of life amid the 16-month long trade dispute between the world's two biggest economies.

Last night's record close for the Dow Jones Industrial Average, as well, was paired with a record high for the Dow Transportation index, the twin peaks form part of what is known as the Dow Theory, a signal investors often rely on to gauge near-term market rallies. Stronger-than-expected third quarter earnings, low Federal Reserve interest rates, a solid and growing domestic economy and tame inflation are all also cited as near-term drivers for equity market gains between now and the end of the year.

That said, Wall Street futures are set for a tepid open Friday, with contracts tied to the Dow indicating a modest 33 point opening bell gain and those linked to the S&P 500 pointing to a 1 point bump for the broader benchmark, which has gained just over 23% so far this year amid its recent record run.

Walt Disney Co. (DIS - Get Report)  shares are likely to be very active Friday, rising more than 5% in pre-market trading after the media giant posted stronger-than-expected fourth quarter earnings Thursday as studio revenues surged past estimates, thanks in part to Toy Story 4 and The Lion King, ahead of next week's Disney+ streaming entertainment service launch.

Overnight in Europe, stocks pulled back from recent four-year highs, despite a weaker euro and the stronger-than-forecast German export gains, taking the Stoxx 600 0.2% lower by mid-day in Frankfurt and clipping 0.22% from Britain's FTSE 100.

Asia stocks, however, were mixed with Japan's Nikkei 225 riding hopes of near-term support from the Bank of Japan, as well as a weaker yen, to a fresh 13-month high of 23,391.87 points while the broader MSCI Asia ex-Japan benchmark slipped 0.55%.

Away from equities, the U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.185% higher on the session as 98.32 even as 10-year U.S. Treasury bond yields eased from yesterday's multi-month highs to trade at 1.915%. 

Global oil prices were also on the back foot, with prices falling sharply amid the broader "risk off" sentiment in stock markets and the overnight strength in the U.S. dollar.

Brent crude contracts for January delivery, the global benchmark, were seen $1.05 lower from their Thursday close and trading at $61.22 per barrel, while WTI contracts for December were marked 94 cents lower at $56.21 per barrel.