(Bloomberg) — U.S. equity futures fell along with Asian stocks Friday and bonds rallied as shaky company earnings and the prospect of tighter Federal Reserve monetary policy buffeted sentiment.
Most Read from Bloomberg
Nasdaq 100 and European contracts fell about 1%, as did MSCI Inc.’s Asia-Pacific equity index. Demand for havens pushed the 10-year U.S. Treasury yield below 1.80% and made the yen the top performer in the Group-of-10 basket.
An unnerving, late-session Wall Street reversal on Thursday wiped out the day’s gains before marooning the tech-heavy Nasdaq 100 in a correction. The S&P 500 also turned lower and is now more than 5% off its January high.
Investors are grappling with the prospect of reduced stimulus in the Fed’s effort to quell high inflation. Company developments also soured the mood, with Netflix Inc. plunging on a disappointing subscriber outlook. A report that Washington is allowing some Baltic states to send U.S.-made weapons to Ukraine stoked concerns about a standoff with Russia.
Oil was lower on a surprise climb in U.S. crude stockpiles. The White House also said it can work to accelerate the release of strategic reserves.
Receding pandemic-era stimulus is whipsawing a range of assets. Markets face a one-two punch of Fed rate hikes and the possible reduction of its $8.8 trillion balance sheet to fight price pressures.
“A lot of people are talking about inflation and that sort of thing, but their portfolios really don’t reflect it,” Richard Bernstein, chief investment officer at Richard Bernstein Advisors LLC, said on Bloomberg Television. “That’s the indecision, the uncertainty that you are seeing now.”
The U.S. company reporting season so far has been uneven, highlighting the risk that it may fail to enliven animal spirits in the stock market. Peloton Interactive Inc., the onetime darling of the stay-at-home trade, plummeted in regular trading on a report of temporary production halts.
“Valuations are finally — after quite a long period of time — going to start to matter, and cash generation and balance sheets are going to be very important as we navigate what is no longer a very easy Fed policy going forward,” Sarah Hunt, portfolio manager at Alpine Woods Capital Investors, said on Bloomberg Television.
In the latest U.S. data, jobless claims reached a three-month high, suggesting the omicron variant may be having a bigger impact on the labor market.
Elsewhere, Bitcoin weakened, falling below the $40,000 level.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
-
S&P 500 futures fell 0.5% as of 6:22 a.m. in London. The S&P 500 fell 1.1%
-
Nasdaq 100 futures declined 1%. The Nasdaq 100 fell 1.3%
-
Japan’s Topix index fell 0.6%
-
Australia’s S&P/ASX 200 index shed 2.3%
-
South Korea’s Kospi index dropped 1.1%
-
Hong Kong’s Hang Seng index fell 0.5%
-
China’s Shanghai Composite index lost 0.8%
-
Euro Stoxx 50 futures decreased 1.5%
Currencies
-
The Bloomberg Dollar Spot Index fell 0.1%
-
The euro was at $1.1326
-
The Japanese yen was at 113.83 per dollar, up 0.3%
-
The offshore yuan was at 6.3447 per dollar
Bonds
Commodities
-
West Texas Intermediate crude fell 1.7% to $84.09 a barrel
-
Gold was at $1,840.59 an ounce
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
