A look at the day ahead in the US and global markets by Mike Dolan
A volatile week for megacaps on Wall Street appears to be ending on a positive note as Microsoft (NASDAQ:) and Alphabet (NASDAQ:) posted overnight gains, while Asia’s yen tumbled again as the Bank of Japan left policy on hold.
After a day in which Meta’s (NASDAQ:) outsized artificial intelligence spending appeared to spook investors and send both the stock and broader tech sectors into a tailspin, its rivals appeared to steady the ship overnight .
Google parent company Alphabet announced its first-ever dividend and a $70 billion stock buyback, sending its shares up nearly 16% after the bell. Microsoft beat expectations for its quarterly revenue and profit, thanks to gains from adopting artificial intelligence in its cloud services, and its shares rose more than 4% in extended trading.
Snap was another outrageous move, with shares rising nearly 30% in Frankfurt after the photo messaging app owner beat expectations for quarterly revenue and user growth.
It wasn’t all sweetness and light, however, and shares of chipmaker Intel (NASDAQ:) fell more than 8% after it forecast second-quarter revenue and profit below market estimates and lagging the booming AI market. components.
Still, the outcome for the broader market has seen Nasdaq futures rise more than 1% overnight and futures up about 0.8% – with Friday’s day of gains led by big oil names such as ExxonMobil (NYSE:) and Chevron (NYSE:).
Remove ads
.
Asian and European stock markets also rose on Friday, with the stock market volatility gauge remaining in check near Thursday’s low in about two weeks.
But much of the focus of Asia’s macro markets today has been on the plummeting and increasingly volatile Japanese yen – which fell more than 0.5% to a new 34-year low of 156.82 per dollar, while the Bank of Japan maintained its still easy monetary policy. policy.
It swung wildly during trading hours in London as traders grew wary of official action to reverse the decline, although no actual intervention was detected yet and the price captured a large share of the day’s losses.
The Bank of Japan kept interest rates near zero and highlighted growing belief that inflation was on track to reach 2% sustainably in the coming years, signaling its willingness to raise borrowing costs later this year.
But the yen fell due to a lack of clear guidance on the future path of rate hikes and the still-yawning interest rate differential between Japan and the rest of the developed world.
With the dollar effectively softening against other major currencies after Thursday’s surprise miss in U.S. gross domestic product value, the yen’s weakness against the dollar was widespread elsewhere as well.
The US economy grew at its slowest pace in almost two years in the first quarter, but this figure was partly depressed by a rise in imports. This sign of solid domestic demand and an acceleration in inflation rates for the quarter reinforced expectations that the Federal Reserve would not cut spending. interest rates before September.
Remove ads
.
Still, Treasury yields fell from recent highs on Friday as traders awaited the release of the Fed’s preferred PCE inflation gauge for March later in the day.
While headline PCE inflation is expected to have accelerated to 2.6% over the past month, core rates are expected to have fallen to 2.7%.
In dealmaking, Anglo American (JO:) on Friday rejected rival miner BHP Group’s (NYSE:) 31.1 billion pound ($39 billion) takeover proposal, saying the offer would significantly undermine the London-listed miner and its future prospects undervalued.
Key agenda items that could provide direction to the US markets later on Friday:
* US March PCE inflation, Dallas Fed cut average PCE, latest University of Michigan sentiment index from April
* US corporate earnings: Exxon Mobil, Chevron, AbbVie (NYSE:), Colgate Palmolive, T Rowe Price (NASDAQ:), Aon (NYSE:), HCA Healthcare (NYSE:), Roper Technologies (NASDAQ:), Charter communications (NASDAQ:), Centene (NYSE:), Bal (NYSE:), LyondellBasell, Phillips 66 (NYSE:)
* German Chancellor Olaf Scholz receives NATO Secretary General Jens Stoltenberg in Berlin in preparation for the alliance’s 75th anniversary
(By Mike Dolan, Editing by Gareth Jones mike.dolan@thomsonreuters.com)
