Global equities and US stock futures rose and recovered somewhat after the S&P 500 nearly went bearish and the People’s Bank of China cut interest rates.
Futures linked to the S&P 500 rose 1.1%, suggesting the broad market index could be recovering after falling 0.6% to hit its lowest level since March 2021 on Thursday. Nasdaq 100 futures were up 1.4%, signaling gains for tech stocks after the opening bell. Dow Jones Industrial Average futures rose 0.9%.
Equities have come under pressure this week on worries about global growth. Investors worried about how aggressively the Federal Reserve would respond to China’s bout of high inflation and Covid-19 lockdowns, which curbed economic activity and disrupted supply chains, prompting a sell-off.
The S&P 500 is on track to close for the seventh straight week and is down around 3% so far. It was close to inching into the bear market in Thursday’s choppy trading, market short for a 20% decline from its last peak.
On Friday, China’s central bank unexpectedly cut a key interest rate that serves as a benchmark for mortgages, a move expected to support the country’s property market. Other interest rates were left unchanged.
“We currently have a fear of growth coming from China and biting monetary policy in the US. So sentiment this morning was helped by China’s actions,” said Arun Sai, multi-asset strategist at Pictet Asset Management. “But we still need to build more evidence to convince markets that a soft landing is possible.”
Government bonds have rallied strongly this week as they typically do well in tough economic times. The benchmark 10-year Treasury bond yield rose to 2.859% on Friday from 2.854% on Thursday.
Shares in Ross Stores plunged 24% in premarket trading after the retailer posted a drop in sales and said it expects another drop this quarter. Foot Locker rose 4% after its CFO said he expected the company’s full-year earnings to come in at the high end of guidance.
Palo Alto Networks rose 12% after reporting quarterly revenue that beat analysts’ expectations. Cybersecurity firm CrowdStrike was also up 5.3%.
Farm equipment maker Deere fell 5.8% premarket despite higher sales and earnings on strong demand.
“The earnings season has been good, there are slightly more companies than usual that are beating expectations. The question is where will we see the full impact of the oil price spike and the war in Ukraine from next quarter,” said Kiran Ganesh, multi-asset strategist at UBS. “That’s going to be key, that’s a bit of a preview.”
A trader worked on the floor of the New York Stock Exchange on Thursday.
Photo: Seth Little/Associated Press
Overseas, the Stoxx Europe 600 gained 1.6%. Asian equities also rose, with the Shanghai Composite up 1.6% and Hong Kong’s Hang Seng up 3%.
The Swiss luxury goods house Cie. Financière Richemont fell 9% after missing analysts’ estimates of operating profit after suspending operations in Russia.
Oil prices edged up slightly, with Brent crude up 0.3% to trade at $112.42 a barrel.
Write to Anna Hirtenstein at [email protected]
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