US Equity Futures Struggle as Gold Rout Deepens: Markets Wrap
(Bloomberg) — US futures struggled for direction as investors parsed the latest earnings reports and corporate news amid worries over trade, the US government shutdown and geopolitical risks. Gold and silver extended declines after Tuesday’s slump.
US equity futures were little changed after a rally on Wall Street lost steam. Netflix Inc. fell in premarket trading after the streaming-video company reported third-quarter results that were hurt by a tax dispute with Brazil. Texas Instruments Inc. slumped on an underwhelming outlook. Capital One Financial Corp., Hilton Worldwide Holdings Inc. and Boston Scientific Corp. gained after earnings beats.
Alphabet Inc. rose after a report that the Google owner is in talks with Anthropic PBC about a cloud-computing deal worth billions of dollars. Warner Bros. Discovery Inc. advanced after saying it’s considering a sale of the company, with Netflix and Comcast Corp. said to be among potential bidders.
Gold fell more than 2%, closing in on $4,000 an ounce and deepening its worst intraday drop in more than a dozen years in the previous session, amid concerns its rally had run too far, too fast. Silver also declined following Tuesday’s 7.1% fall.
Early US earnings point to the best corporate results in four years, with 85% of companies reporting beats. Despite recent de-risking amid concerns over trade and credit, stock exposure among global macro hedge funds and long-only strategies remains at the highest in over a year, according to Barclays Plc. Drawdowns have been short-lived as investors see them as opportunities to add risk to their portfolios.
Earnings will “play a decisive role in determining whether the rally can be sustained,” said Linh Tran, a market analyst at XS.com. “Profit expectations for major tech companies have been revised upward, while consumer and financial sectors may benefit from resilient demand and higher interest margins. If corporate results continue to outperform forecasts, this could help the S&P 500 extend its gains into Q4.”
The Stoxx Europe 600 index fluctuated, with consumer products and services leading declines after results from L’Oreal SA, Hermes International SCA and Adidas AG failed to meet lofty expectations. Energy stocks led gains as crude oil rose.
Among companies reporting in Europe on Wednesday, Barclays Plc gained after raising its earnings guidance and unveiling a £500 million buyback. Akzo Nobel NV slumped after the paintmaker lowered its earnings outlook, with customers more hesitant to spend amid rising global tariffs and softer economic conditions.
Novo Nordisk A/S dropped as much as 3.4%, adding to Tuesday’s 1.4% decline, after the Danish drugmaker said it will convene a shareholders’ meeting next month to elect new board members.
“Market sentiment remains nervous,” said Mohit Kumar, chief economist and strategist at Jefferies International Ltd. “Our view remains that a selloff from these levels would be healthy as it would clean up some long overhangs and provide us an opportunity to buy.”
The heightened focus on precious metals this week follows a rapid rally earlier this year that was fueled by central bank-led buying and worries about fiscal woes in developed countries. The slumps also came after technical indicators showed the recent scorching rallies were likely overstretched.
“We’re positive on gold, but I think that because it has moved up too quickly, now we’re seeing that there is a correction,” said Anthi Tsouvali, a multi-asset strategist at UBS Global Wealth Management CIO. “But it’s interesting to see where that will play out and if a negative sentiment continues.”
What Bloomberg strategists say…
“Gold’s biggest slump in five years on Tuesday has a disquieting message for other corners of the markets that are awash in froth: a quick move to the nearest exit by just a few can spark a veritable stampede.”
-Ven Ram, Macro Strategist. Read more here.
Elsewhere, the pound fell, gilts gained and the FTSE 100 stock benchmark rose after UK inflation held steady last month, with consumer prices rising at a slower pace than the median analyst estimate. Traders added to bets on Bank of England interest-rate rate cuts.
The dollar and Treasuries were largely flat. Oil jumped following a report that the US and India are nearing a trade deal that could see the South Asian nation gradually reducing imports of Russian crude.
US Shutdown
The ongoing US government shutdown has become the second-longest on record. The shutdown has delayed the publication of official data, including September’s inflation figures which the government plans to release on Friday.
Trade tensions remain in focus, after Donald Trump predicted an upcoming meeting with his Chinese counterpart, Xi Jinping, would yield a “good deal” on trade. However, the US president also conceded that the highly anticipated talks may not happen.
Meanwhile, geopolitics are back on the radar. Russia launched multiple drone and missile strikes on Ukraine as the latest peace attempts by US President Donald Trump appeared to be floundering. European defense stocks including Rheinmetall AG and Hensoldt AG gained.
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Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 8:17 a.m. New York time Nasdaq 100 futures fell 0.2% Futures on the Dow Jones Industrial Average were little changed The Stoxx Europe 600 rose 0.1% The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1589 The British pound fell 0.3% to $1.3336 The Japanese yen was little changed at 151.79 per dollar Cryptocurrencies
Bitcoin fell 2.6% to $108,000.64 Ether fell 2.7% to $3,850.87 Bonds
The yield on 10-year Treasuries declined one basis point to 3.95% Germany’s 10-year yield was little changed at 2.55% Britain’s 10-year yield declined nine basis points to 4.39% Commodities
West Texas Intermediate crude rose 2.1% to $58.45 a barrel Spot gold fell 2.1% to $4,040.31 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika, Marilen Martin and Jack Ryan.
(An earlier version of this story corrected the attribution of strategist’s comment after 12th paragraph.)
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