Dow Futures Weaken Amid Tech Sector Concerns; Oil Rebounds on OPEC Cut Plans

The Friday Market Minute

  • Global stocks mixed amid tech sector demand concerns, U.S.-China trade talk progress, following weaker-than-expected third quarter earnings from Nvidia.
  • Asia stocks book modest gains as dollar softens, but Japan's Nikkei 225 slumps as chip and game stocks slide in the wake of Nvidia's gloomy Q4 outlook.
  • Currency markets continue to gyrate following last night's 1.6% Brexit-triggered plunge in the pound, with Prime Minister Theresa May vowing to see her Brexit deal through Parliament.
  • Oil rebounds after reports suggest Saudi Arabia is urging OPEC members to cut production by 1.4 million barrels a day next year. 
  • U.S. equity futures indicate a 160-point fall for the Dow ahead of industrial production data and quarterly earnings from Viacom and Rockwell Collins.

Market Snapshot

Global stocks were mixed in early Friday trading, with investors rattled by weakness in the chip sector that suggests further erosion in consumer tech demand and mixed reports on the state of U.S.-China trade talks, as volatility across all asset classes continues to accelerate.

Chipmaker Nvidia Corp.'s (NVDA) disappointing third quarter earnings late Thursday, as well as its gloomy holiday season outlook, has added yet another bearish tinge to both the semiconductor sector and the broader market for tech shares following Apple Inc.'s (AAPL) extended declines triggered by reports of waning iPhone demand. Nvidia shares plunged 17% in after-hours trading in New York Thursday, and dragged sector peers lower in Asia trading Friday.

Broader investor sentiment, meanwhile, was blunted by conflicting reports over what, if any, progress has been made in the stalled U.S.-China trade talks, with the office of Trade Secretary Robert Lighthizer denying a Financial Times story that suggested the next round of tariffs on China-made goods was "on hold"  ahead of talks between President Donald Trump and China's Xi Jinping later this month at the G20 Summit in Argentina.

Stocks in Asia were able to booked modest gains into the final hours of trading, however, with the MSCI Asia ex-Japan rising 0.2% following a 0.57% slide for the Nikkei 225 in Japan, where chip and gaming stocks slumped in the wake of Nvidia's after-hours decline.

U.S. equity futures, however, were still trading with a cautious tenor, as contracts tied to the Dow Jones Industrial Average indicated a 160 point decline and those linked to the broader S&P 500 suggesting a 20 point pull back.

Nvidia Corp. (NVDA) shares were indicated sharply lower in pre-market trading Friday after the chipmaker posted weaker-than-expected third quarter sales, and issued a gloomy holiday quarter outlook, as inventories piled up amid a slowdown in demand from cryptocurrency miners.

Nvidia shares were marked 17.9% lower in pre-market trading Friday, indicating an opening bell price of $166.90 each, the lowest in more than a year and a move that will lope more than $20 billion in market value from the Santa Clara, Calif.-based tech group.

European stocks were firmer at the start of trading in London and Frankfurt, with the FTSE 100 getting a boost from a weaker pound, which hovered around 17-month lows of 1.2800 against the U.S. dollar following yesterday's Brexit-related turmoil that threatens the Premiership of Theresa May.

The Stoxx Europe 600 was marked 0.3% higher by late morning trade as the euro slipped to 1.1324 against the greenback following dovish comments on growth and interest rates from European Central Bank President Mario Draghi.

"Uncertainties surrounding the medium-term outlook have increased," Draghi said in prepared remarks to a banking conference in Frankfurt. "If firms start to become more uncertain about the growth and inflation outlook, the squeeze on margins could prove more persistent."

"This would affect the speed with which underlying inflation picks up and therefore the inflation path that we expect to see in the quarters ahead," he added. 

Vivendi SA (VIVHY) shares were an early market mover of note, rising 4.4% in Paris after it topped analysts' forecasts for third quarter sales and said it would move ahead with plans to sell its stake in Universal Music Group. 

Oil prices were back on the march Friday, as well, rising for the second consecutive session -- following the longest losing streak on record -- amid reports that Saudi Arabia, the lead OPEC producer, is pushing for cartel members to collectively cut around 1.4 million barrels per day from their output targets next year.

That move, however, was offset by data from the Energy Information Administration that showed domestic stockpiles rose by 10.3 million barrels last week as U.S. production rose to a record 11.7 million barrels per day.

Brent crude contracts for January delivery, the global benchmark, were seen $1.28 higher from their Thursday close in New York and changing hands at $67.90 per barrel while WTI contracts for December, which are more tightly liked to U.S gas prices, were marked $1 higher at $57.46 per barrel but still some 25% from the October 4 peak of $76.41.

More from Markets

Ciena Jumps After Earnings Blow Out Estimates

Ciena Jumps After Earnings Blow Out Estimates

Watch Dollar Valuations as the ECB's Mario Draghi Talks QE: Market Recon

Watch Dollar Valuations as the ECB's Mario Draghi Talks QE: Market Recon

Apple, Adobe, Huawei, CVS and Boy Scouts - 5 Things You Must Know

Apple, Adobe, Huawei, CVS and Boy Scouts - 5 Things You Must Know

Jim Cramer: This May Be an Inflection Point for Banks and Oils

Jim Cramer: This May Be an Inflection Point for Banks and Oils

A Tale of 2 Headquarters: New York City Divided by Amazon Debate

A Tale of 2 Headquarters: New York City Divided by Amazon Debate