US equity futures experienced an uptick as trade tensions alleviated, and investors maintained their bets on potential interest rate cuts by the Federal Reserve ahead of a significant inflation update due later on Friday. Contracts for the S&P 500 rose approximately 0.3%, following a tech-driven rally that has put the benchmark index on track for a second consecutive weekly gain exceeding 1%. Meanwhile, futures for the Nasdaq 100 increased by 0.5%.
In pre-market trading in New York, shares of Intel Corp surged after the company issued an optimistic revenue forecast. Additionally, Ford Motor Co. showed positive signs as it prepares for a recovery next year from a significant fire that impacted a key supplier. Conversely, Newmont Corp. saw its shares decline after the precious metals miner’s guidance failed to meet investor expectations.
Market sentiment indicates that traders are pricing in a rate cut from the Federal Reserve as soon as next week, with Treasuries poised for their most successful monthly performance since February. Despite possible signs of persistent inflation in the upcoming consumer price index report, investors are likely to overlook this data due to the prolonged data hiatus caused by the US government shutdown. Both Treasury yields and the value of the dollar remained stable.
Michael Brown, a senior research strategist at Pepperstone Group Ltd., noted, “Regardless of the inflation report, it won’t prevent the FOMC from implementing a 25 basis-point cut next week or in December, although we might see some initial volatility as the data is released.”
In Europe, the Stoxx Europe 600 index initially gained but then reversed course amid mixed earnings outcomes. France’s CAC 40 benchmark fell unexpectedly, reflecting broader market uncertainty.
Among European companies that released earnings, French pharmaceutical firm Sanofi SA, the UK’s NatWest Group Plc, Swiss cement manufacturer Holcim AG, and Swedish defense company Saab AB all reported positive results that exceeded forecasts. However, aluminum supplier Norsk Hydro ASA, Dutch lighting producer Signify NV, and elevator company Schindler Holding AG fell short of analysts’ expectations.
The ongoing strong earnings season has contributed to market resilience against geopolitical and trade challenges. So far, nearly a quarter of the firms have reported earnings, showcasing a year-on-year increase in earnings per share of 4% in Europe and 14% in the US, which has surpassed predictions according to analysts at Barclays Plc. The upcoming results from major tech companies, including Alphabet Inc., Meta Platforms Inc., and Apple Inc., will be crucial in determining the market’s trajectory as these firms are expected to report next week.
This positive momentum in earnings indicates a potentially bright outlook for the markets, strengthening investor confidence amid the prevailing uncertainties.