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U.S. stock index futures were lower on Friday as investors weighed fears over the delta variant of coronavirus, the imminent tapering of Federal Reserve bond buying, and China’s restrictions on its economy.
How are benchmarks trading?
-
Futures on the Dow Jones Industrial Average
YMU21,
+0.35% YM00,
+0.35%
fell 48 points, or 0.1%, at 34,770. -
S&P 500 futures
ESU21,
+0.45% ES00,
+0.45%
traded 0.1% lower to reach 4,397, down 3.90 points. -
Futures for the Nasdaq-100
NQ00,
+0.75%
were up 20.75 points to reach 14,950.50, a gain of 0.2%.
On Thursday, major markets ended mixed, with the S&P 500
SPX,
and Nasdaq Composite
COMP,
registering small gains, while the small-cap Russell 2000
RUT,
ended 1.2% lower.
What’s driving markets
With little U.S. economic data and few corporate news releases expected Friday, traders will be left to focus on the developments from earlier this week, including the spread of delta variant, angst over monetary policy, and the outlook for economic growth.
“The key 10-year yields
TMUBMUSD10Y,
were barely changed as equities reversed: suggesting that the move was more about the top-down risks to growth building, specifically around the delta variant, after several weeks when the bottom-up corporate news has provided support,” said Ian Williams, a strategist at U.K. broker Peel Hunt.
Michael Hartnett, chief investment strategist at Bank of America, says the market is acting in a recessionary fashion.
“I spent $32 trillion and all I got was this lousy W-shape recovery,” he quipped.
The U.S. yield curve, as measured by the gap between the 5-
TMUBMUSD05Y,
and 30-year
TMUBMUSD30Y,
bonds, is at its flattest in a year. Global stocks excluding U.S. technology shares are unchanged the last eight months. Emerging market stocks are negative this year. U.S. small-cap stock prices are breaking down. A range of commodity prices have fallen by double-digit percentages from highs. And the top four sectors of the S&P 500 index in the second half of the year so far are utilities, healthcare, REITs and staples.
And the Cboe Volatility Index
VIX,
often referred to by its ticker symbol VIX, a measure of implied stock market volatility, jumped in the early hours Friday, while the U.S. dollar
DXY,
reached a fresh nine-month high.
Meanwhile, concerns about COVID also have tamped down bullishness, as the daily average of new U.S. cases over the past seven days rose to 143,827 as of Thursday, up 44% from two weeks ago and the most since Feb. 1, according to a New York Times tracker. Meanwhile, the daily average for U.S. deaths increased to 911, up 108% in two weeks, and the most since March 31, while hospitalizations of 86,877 was up 53% from two weeks ago and the most since Feb. 9.
Which companies are in focus?
- Shares of Mudrick Capital Acquisition Corp. II MUDS were in focus Friday, after the special-purpose acquisition company, SPAC, said the merger agreement that would’ve have taken The Topps Company public has been terminated “by mutual agreement.”
- Shares of Deere & Co. DE edged up in premarket trade after the construction, agriculture and turf care equipment maker reported fiscal third-quarter profit that more than doubled and was well above expectations, and raised its full-year net income outlook.
- Foot Locker Inc. FL shares jumped in Friday premarket trading after the athletic retailer reported second-quarter earnings that far exceeded expectations.
- LumiraDx Ltd. and SPAC CA Healthcare Acquisition Corp. said Friday the value of their merger deal to take LumiraDx public has been cut by 40%, citing “various considerations,” including recent market environment for publicly traded diagnostic companies and declines in COVID-19 testing volumes.
How are other assets faring?
- The yield on the 10-year Treasury note TMUBMUSD10Y 1 basis points to 1.235%. Yields fall as bond prices rise.
- The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, rose 0.1% and traded around a nine-month high.
- Oil futures were set for a seventh straight decline, with the U.S. benchmark CL00, down more 2% at $63.31 a barrel, headed for a 9% decline and its sharpest weekly slide in nine months. Gold futures GC00, were up 0.1% near $1,786 an ounce.
- In Europe, the Stoxx Europe 600 SXXP was trading down 0.2% and London’s FTSE 100 UKX was off by 0.1%.
- In Asia, Hong Kong’s Hang Seng HK:HSI suffered another rough session, falling 1.8%, as the index is now 19% below its February high on the continued regulatory crackdown in China. China on Friday passed a strict data privacy law that is due to take effect in November. Meanwhile, while the Shanghai Composite SHCOMP shed 1.1% and Japan’s Nikkei 225 NIK declined 1%
