Key facts
- World stocks are heading for a weekly loss, and long-dated bond yields are near multi-decade highs.
- Rising oil prices are increasing inflation fears and expectations of global rate hikes.
- The U.S. dollar has strengthened against the Japanese yen, which is near a 40-year low.
- The Trump administration imposed new tariffs on goods from 60 trading partners.
- Geopolitical tensions escalated with threats against Iran and its Houthi allies.
- Oil prices surged above $100 a barrel on Thursday, though they eased on Friday.
World stocks are poised for a weekly loss, with long-dated bond yields nearing multi-decade highs as rising oil prices fuel inflation fears and expectations for global rate hikes. The U.S. dollar has been buoyed by rising yields, while the Japanese yen is near 40-year lows.
U.S. stock index futures showed modest gains on Friday, following a tech-driven selloff in the previous session. Investors are evaluating fresh earnings reports, escalating Middle East tensions, and new tariffs announced by the Trump administration. The S&P 500 and Nasdaq experienced their steepest one-day drops in a month on Thursday, with concerns growing over the capital spending and cash burn of tech giants like Alphabet and Tesla after their recent earnings reports.
Intel's shares rose in premarket trading after the company forecast quarterly profit and revenue above Wall Street estimates and outlined increased spending plans for the next two years. However, the broader semiconductor sector remains under pressure.
The Trump administration has imposed new tariffs of 10% and 12.5% on goods from 60 trading partners, including Europe and China, citing insufficient enforcement of forced-labor bans. This move follows the expiration of a temporary global tariff.
Geopolitical risks are also a significant concern, with President Donald Trump threatening severe military action against Iran and its Houthi allies after attacks on Saudi oil tankers in the Red Sea. Oil prices had surged above $100 a barrel on Thursday due to fears of prolonged disruption to energy supplies, although they eased on Friday. A sustained energy shock could reignite global inflation.
The Federal Reserve is scheduled to meet next week, with markets currently pricing in approximately a one-in-three chance of a rate hike. Investors will also be closely watching the upcoming PCE data, the Fed's preferred inflation gauge.
Dow E-minis, S&P 500 E-minis, and Nasdaq 100 E-minis all showed gains in premarket trading. The S&P 500 and Nasdaq are on track for their second consecutive weekly loss, while the Dow is set for its third straight week of declines.
Oracle saw its shares climb after the Pentagon announced a multi-year agreement to consolidate its software licenses with the cloud firm. Investors are also awaiting preliminary July PMI data for U.S. manufacturing and services activity.