(Bloomberg) — US stock index futures posted modest gains at the end of a turbulent week for global markets, amid worries that the financial turmoil that has battered bonds and stocks is not yet over.
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Contracts on the S&P 500 fluctuated after the index rose 1.8% yesterday as larger banks threw a lifeline to First Republic Bank, the latest US lender, to signal stress. That didn’t stop First Republic shares from slipping during after-hours trading, however. Futures on the Nasdaq 100 remained steady as the rate-sensitive benchmark heads for its best week since November amid expectations that the Federal Reserve will ease its tightening stance. The 10-year Treasury yield fell and a measure of the dollar fell.
Banks including JPMorgan Chase & Co. and Citigroup Inc. joined forces Thursday to show their support for First Republic. While the rescue attempt helped lift sentiment, billionaire Bill Ackman was among those who wondered if it would be enough to stop the crisis. Meanwhile, US banks borrowed a combined $164.8 billion from two Federal Reserve backstop facilities over the last week, a sign of escalating funding problems following the collapse of the Silicon Valley bank.
“We do not expect a full-blown financial crisis, but one cannot ignore the underlying dynamics,” said Karsten Junius, chief economist at Bank J Safra Sarasin AG. “Financial conditions will most likely continue to tighten, increasing recession risks. We therefore advocate a defensive positioning on risk assets and a tactically cautious stance on the banking sector, although the constructive case for banks remains intact over the medium to longer term.”
The Stoxx Europe 600 Index was up about 1% at the open, although the index is still heading for a second weekly decline. An index of European bank stocks fell 8% this week, even after the Swiss central bank took Credit Suisse Group AG as a lifeline. Shares of the troubled Swiss lender rose on Friday as the idea of a forced combination with larger competitor UBS Group AG was shot down. Bonds across Europe rallied, with the 10-year German government bond yield falling four basis points.
Markets also digested a 50 basis point rate hike by the European Central Bank and comments from the ECB President that inflation was likely to remain too high for too long. The ECB rate hike has been added to bets that the Federal Reserve will also hike next week.
Indices rose in Hong Kong, Japan and Australia amid a rebound in bank stocks. Still, an Asian equity indicator was set for a second weekly loss following the recent turmoil in the banking sector.
Friday’s quarterly triple witching, which sees all index futures, stock index options and stock options contracts expire, could add to the volatility in trading.
The BlackRock Investment Institute does not expect cracks in the financial sector to stop central banks from raising interest rates further to curb inflation. She expects both the ECB and the Fed to “go as far as possible to differentiate their anti-inflationary campaigns from measures to deal with banking problems and protect the financial system,” a team of BlackRock analysts wrote in a statement.
In China, traders were able to access widespread bond price feeds again after an abrupt suspension of data rattled the $21 trillion market earlier in the week.
Bitcoin surged to near its highest level since June amid a broad cryptocurrency rally. Other tokens like Ether, Solana, and Polkadot also surged.
Elsewhere, oil prices rose but were still heading for their worst week so far this year. Golden Rose.
These are the main market movements:
The Stoxx Europe 600 was up 1% at 8:11 am London time
S&P 500 futures up 0.3%
Nasdaq 100 futures up 0.3%
Futures on the Dow Jones Industrial Average rose 0.2%
MSCI Asia Pacific Index up 1.4%
MSCI Emerging Markets Index up 1.4%
The Bloomberg Dollar Spot Index fell 0.4%
The euro rose 0.5% to $1.0666
The Japanese yen rose 0.4% to 133.23 per dollar
The offshore yuan rose 0.4% to 6.8673 per dollar
The British pound rose 0.5% to $1.2167
Bitcoin surged 5.8% to $26,198.71
Ether was up 3.9% to $1,723.81
The 10-year government bond yield fell two basis points to 3.56%
The 10-year German government bond yield fell three basis points to 2.26%
The 10-year UK government bond yield fell one basis point to 3.41%
Brent crude rose 1% to $75.47 a barrel
Spot gold rose 0.5% to $1,928.47 an ounce
This story was created with the support of Bloomberg Automation.
–Assisted by Carly Wanna and Angel Adegbesan.
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Source : finance.yahoo.com