U.S. equity futures remained largely unchanged early Friday, as climbing Treasury yields continued to influence markets, with the Dow heading for its fourth straight losing week.
Meanwhile, global markets showed mixed results: European stocks opened higher while Asian markets were varied, and optimism emerged around a potential diplomatic solution in the Persian Gulf, leading to a dip in oil prices.
U.S. equity futures showed minimal movement early Friday, mirroring the continued ascent of Treasury yields. The Dow Jones Industrial Average is poised to record its fourth consecutive losing week, underscoring ongoing market uncertainty.
S&P 500 futures dipped slightly by 0.05%, while Nasdaq-100 futures managed to inch higher. Futures tied to the Dow Jones Industrial Average saw a modest gain of 3 points, or 0.01%. This follows Thursday's regular trading session where both the S&P 500 and Nasdaq Composite concluded flat.
A significant driver of market sentiment this week has been the bond market, where the 10-year Treasury yield surged to 5.225% late Thursday — a level not seen since 2007. The 30-year yield also climbed to 5.502%. This surge in yields is attributed to hawkish remarks from Federal Reserve Governor Michael Barr, persistent high energy prices due to the ongoing Iran war, and a robust purchasing managers' report. Futures trading now indicates a roughly 68% probability of an October rate hike, according to the CME FedWatch tool.
The impact extends to consumers, with the 30-year fixed rate mortgage rising to 7.45%, its highest since April 2024, signaling increasing borrowing costs. Morgan Stanley economist Heather Berger noted that these pressures are expected to curb consumer spending, particularly on goods, contributing to an anticipated 40-basis point deceleration in real consumption growth next year.
Looking at the week's performance, the Dow is set for a 0.6% decline, marking its fourth consecutive weekly loss. In contrast, the S&P 500 is on track for a 0.7% advance, and the Nasdaq is up 1.6% week-to-date. Traders today will be closely watching the University of Michigan consumer sentiment report and durable goods data for further insights.
European and Asian Markets See Mixed Fortunes
European stocks opened higher on Friday, buoyed by a decline in oil prices. The pan-European Stoxx 600 climbed almost 0.7% shortly after the opening bell and is headed for a weekly rise of 0.15%.
In Asia-Pacific, Japan's Nikkei 225 closed 1.3% higher. However, Australia's S&P/ASX 200 fell 0.43%, and Hong Kong's Hang Seng index was down 1.21% in the final hour of trade. Markets in mainland China and South Korea were closed for a holiday.
German Consumer Confidence Suffers 'Significant Setback'
Germany's consumer confidence experienced a "significant setback" in September, according to a new report by the Nuremberg Institute for Market Decisions (NIM) and GfK. Rising energy prices have severely impacted income expectations, which are now at their lowest since April. The report highlights that most households anticipate reduced purchasing power due to high energy costs, leading to skepticism about future income.
Global Affairs: AI Cooperation and Oil Diplomacy
Chinese President Xi Jinping urged U.S. President Donald Trump to prioritize cooperation over competition in artificial intelligence during their White House meeting. Xi emphasized the potential for continued AI dialogue to exchange views on risks and benefits, jointly guarding against misuse. This also comes as "panda diplomacy" makes a return between the two nations.
Oil prices saw a dip on Friday, following reports of U.S. and Iranian negotiators discussing a phased deal to de-escalate the Persian Gulf standoff. The proposed deal involves Tehran allowing navigation in the Strait of Hormuz in exchange for the U.S. ending its naval blockade, though the details of its current viability remain uncertain after a similar agreement previously collapsed. Despite the daily fall, gasoline prices continue to climb domestically, with the national average reaching $4.48 per gallon, fueled by persistently high energy costs from the U.S. war with Iran.
Company Highlights: Oracle Japan Surges, Akamai & Scholastic Make Waves
Shares of Oracle Corp Japan soared over 7% on Friday, after reporting record fiscal first-quarter sales and profits, driven by strong cloud business growth. This performance stands in stark contrast to its U.S. parent company, which saw a more than 3% drop overnight due to a 'force majeure' notice related to its New Mexico data center project.
In extended trading, Akamai Technologies surged nearly 20% after announcing an $11.6 billion, seven-year computing power agreement with Anthropic, which also includes a warrant for Anthropic to purchase up to 5% of Akamai's shares. Costco Wholesale posted strong fourth-quarter results, beating earnings and revenue estimates, with shares marginally higher. Conversely, Scholastic Corp plummeted almost 13% after reporting an adjusted loss of $3.63 per share in its fiscal first quarter, reflecting a 4% decline in revenue year-over-year.
