S&P 500 Index Futures Rise on Earnings, Yen Gains: Markets Wrap
(Bloomberg) — US equity-index futures advanced, signaling that a rally which pushed Wall Street gauges to record highs on strong megacap tech earnings may have further to run. The yen edged lower, paring some of its gains triggered by Japan’s intervention.
Contracts for the S&P 500 Index and the tech-heavy Nasdaq 100 climbed 0.2% after the underlying gauges closed at all-time highs on Thursday, following solid earnings from tech megacaps. Apple Inc. shares advanced in extended trading after delivering a strong revenue forecast.
Meanwhile, the yen was slightly weaker at around 157.18 per dollar after rising as high as 155.57 on Thursday. The currency had been approaching the 161 level before Japan’s government stepped in with its support. The country’s Nikkei stock index gained 0.7%, with several Asian markets shut for a holiday.
Traders had plenty to contend with in April, as oil prices surged on the Middle East crisis with no resolution in sight, yet US stocks posted their best month since 2020, driven by a resurgence in technology shares and the artificial intelligence trade. Investors will test that narrative in the coming weeks, watching whether AI-led momentum can offset price pressures and geopolitical risks.
“As long as the economy continues to grow and companies are able to grow earnings, we can see higher stock prices even in the face of higher energy prices and inflation,” said Chris Zaccarelli at Northlight Asset Management.
While US gross domestic product accelerated during the first quarter, thanks to the massive upswing in AI business investment, it also showed inflationary pressures picked up sharply in March as the war spurred a surge in gasoline prices. The personal consumption expenditures price index — the Fed’s preferred measure of inflation — rose 0.7% last month, the most since 2022.
Inflation concerns are increasing with European Central Bank policymakers likely to raise interest rates at their next meeting in June unless there are positive developments on energy prices and ending the Iran war, according to people familiar with the situation.
“Investors will be watching how the Federal Reserve navigates this backdrop, with a likely more dovish chair entering what appears to be its most divided committee in decades,” said Bret Kenwell at eToro.
What Bloomberg Strategists Say…
The oil shock is showing up clearly in parts of FX and bond markets, yet US risk assets are trading as though the damage will be contained. The sustainability of that dynamic is becoming one of the most important debates in markets.
— Michael Ball, Macro Strategist. For full analysis, click here.
In other corners of the market, US crude climbed 0.6% to trade around $105.70 a barrel after falling in the prior session. President Donald Trump said he was sticking with a naval blockade of Iranian ports as concerns mount that the vital Strait of Hormuz wouldn’t reopen anytime soon.
The dollar was steady Friday after wrapping up its worst month since June. Treasuries gave up some of their gains from the prior session, with the yield on the 10-year note rising two basis points to 4.39%. Gold traded around $4,630 an ounce.
In Asia, attention is on Japan, and what steps the authorities will take after the yen’s surge in the prior session. Until now, the currency had been trading close to its cheapest levels in four decades, risking faster inflation by making imports — including already soaring oil — pricier.
Atsushi Mimura, the country’s top currency official, said authorities are maintaining readiness to intervene in the crude oil futures market, where speculative moves have been affecting the currency.
“Taking into account high energy prices and Japan running substantially negative real interest rates, plus the dollar being in demand, Tokyo cannot expect a sustained drop in dollar-yen,” said Chris Turner, ING global head of markets. “The wild card, however, would be whether the US Treasury gets involved.”
Corporate Highlights:
ANZ Group Holdings Ltd.’s first-half profit surpassed analyst estimates as Chief Executive Officer Nuno Matos pushes ahead with his overhaul of the Australian bank. Caterpillar Inc. delivered stronger-than-expected quarterly earnings and raised its long-term revenue outlook, supported by fast-growing sales from construction and power generation equipment. Eli Lilly & Co. raised its annual sales and profit forecast as demand for obesity medications soared. Mastercard Inc. slipped as the payments network warned that overseas spending growth on the firm’s cards had weakened Elon Musk’s first compensation figure after Tesla Inc. shareholders approved his moonshot pay package is in — $158 billion. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.3% as of 11:21 a.m. Tokyo time Nikkei 225 futures (OSE) rose 0.4% Japan’s Topix fell 0.1% Australia’s S&P/ASX 200 rose 1% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1733 The Japanese yen fell 0.4% to 157.19 per dollar The offshore yuan was little changed at 6.8299 per dollar Cryptocurrencies
Bitcoin rose 0.2% to $76,591.57 Ether was little changed at $2,265 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.39% Japan’s 10-year yield was little changed at 2.510% Australia’s 10-year yield declined five basis points to 5.01% Commodities
West Texas Intermediate crude rose 0.8% to $105.95 a barrel Spot gold rose 0.3% to $4,630.79 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Toby Alder.
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