Futures Up On Earnings, Global Equities Firm On Rate Cut Hopes, Geopolitics Caps Gains

Global equities firm as rate cut hopes are stoked but traders are cautioned not to expect too much from the FOMC.
Thomas Hughes

The U.S. Futures Are Up On Firming Rate Cut Hopes

The U.S. futures are pointing to a slightly higher open on Friday as hopes for aggressive FOMC policy easing intensify. In a speech Thursday, NY Fed President Williams made a case for deep, aggressive, preemptive rate cuts and the market took it to heart.

The odds of a deep 50 bps rate cut have increased to 44% from near zero just a few days ago. The odds for at least three cuts by December is now 70%. The risk, however, is that NY Fed officials came out soon after the remarks were made saying they stemmed from academic opinion and not official Fed policy stance. The Dow Jones Industrial Average led the advance with a gain of 0.29%, the NASDAQ Composite and S&P 500 are close behind.

Geopolitical tensions are also in focus this morning. Oil prices are spiking higher on reports the U.S. shot down an Iranian drone in the Gulf of Hormuz. Iran denies the event happened but traders still fear an escalation of violence in the region. In trade news, Treasury Secretary Steve Mnuchin says his phone conversation with Chinese negotiators was positive and that face-to-face talks may restart soon.

In earnings news, reports from key S&P 500 companies continue to roll in. American Express and BlackRock were among today’s biggest movers. BlackRock reports revenue and earnings missed expectations. The results were driven by lower base fees and security trading revenue. American Express reported mixed results driven by increased member spending and higher costs.

European Markets Edge Higher

European markets are edging higher in early Friday trading. The DAX, FTSE, and CAC are all up about 0.25% in midday trading. Industrial stocks are leading the advance with a gain near 0.7%, media stocks are lagging the market with a loss near -0.70%. Energy and oil stocks are also moving higher following the U.S./Iranian drone incident.

In stock news, shares of biotech firm Galapagos are up more than 7.0% after an upgrade from KBC Securities. The upgrade comes just days after Gilead Lifesciences announced it was upping its stake in Galapagos. AB Inbev is also moving higher in today’s session. The company announced the sale of its Australian subsidiary to Japan’s Asahi. Advertising firm Publicis saw its shares plummet -8.0% after it issued a revenue/profit miss and lowered full-year guidance.

Asian Markets Surge On FOMC Rate Cut Hopes

Asian markets closed Friday’s session broadly higher as FOMC rate cut hopes fuel risk-on sentiment. The Japanese Nikkei led the advance with a gain of 2.0%, the Hang Seng and Kospi both advanced more than 1.0%. The Shanghai Composite and Australian ASX both gained roughly 0.75%.

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