The Friday Market Minute
- Global stocks retreat, with Wall Street set for its biggest monthly decline since March, as tech earnings fail to offset the threat of a surge in coronavirus infections.
- Global COVID infections rise past 500,000, the biggest single-day increase on record, with U.S. cases up 90,000 amid a surge in the mid-west states.
- Underwhelming tech earnings, including muted outlooks from Apple and Facebook, clip FAANG stocks in overnight trading.
- European stocks slump despite hints of further support from the ECB, while Asia follows Wall Street lower on the final trading day of the month.
- Wall Street futures suggest a weaker open ahead of earnings from ExxonMobil, Chevron, Honeywell and Under Armour as well as personal consumption data at 8:30 am Eastern time.
U.S. equity futures slumped lower again Friday, pulling Wall Street into its worst monthly decline since the peak of the coronavirus pandemic in March, as underwhelming tech earnings, a second wave of infections and next week’s looming Presidential election weigh heavily on risk markets.
The U.S. cross a grim milestone of coronavirus infections Thursday, with cases rising by a record 90,000, according to official data, lifting the overall total past 9 million, as the virus tears through mid-west and south-western states.
Hospitalizations are also on the rise, hitting the highest levels since mid-August, while even the White House’s task force is describing the second wave surge as ‘unrelenting’.
The threat of further spread in the weeks ahead, as well as the timeframe needed to roll-out an effective vaccine against what could be a mutating viral infection, has clipped trillions from global stock markets this week and pulled the Dow Jones Industrial Average some 1,800 points lower over the past five days.
Investors looking for relief from after-the-bell tech earnings last night were also disappointed, as muted outlooks from Facebook (FB) – Get Report and Apple (AAPL) – Get Report, as well as caution on rising delivery costs from Amazon (AMZN) – Get Report, pulled most of the FAANG complex lower in extended hours trading. In fact, only Google parent Alphabet (GOOGL) – Get Report, which reported solid advertising gains in all of its geographical regions over the third quarter, traded higher in pre-market dealing.
The net result looks to be another session of heavy selling on Wall Street to close out the month of October, with contracts tied to the Dow indicating a 300 point opening bell decline and those linked to the S&P 500 suggesting a 36 point pullback for the broader benchmark.
Last night’s market reaction to big tech earnings, meanwhile, has the Nasdaq poised for a 210 point opening bell decline.
European stocks were also heavy in the early hours of trading, even with the likelihood of deeper monetary support from the European Central Bank, which hinted yesterday at ‘recalibrating’ its policy tools when it meets again in December.
However, with three of the region’s biggest economies — Germany, France and Spain — under some form of national restriction owing to surging coronavirus infections, stocks were unable to build on last night’s positive close on Wall Street, with the Stoxx 600 falling 0.32% in Frankfurt and Britain’s FTSE 100 sliding 0.26% in London.
Away from equities, the U.S. dollar index stalled in overnight trading at a multi-week high of 93.895, while the CBOE’s key market volatility gauge, the VIX index, slipped 2.2% to 39.40, a level that is still the highest since early June.
Global oil prices were little-changed in overnight trading, but slipped modestly lower and look to be headed for the second consecutive monthly decline amid concerns for energy demand in a second wave pandemic.
WTI contracts for December delivery, the U.S. benchmark, traded 2 cents lower from their Thursday close in New York and were changing hands at $36.17 per barrel in early European dealing while Brent contracts for December, the global benchmark, were seen 4 cents lower at $37.69 per barrel.
Overnight in Asia, market reaction to post-close tech earnings pulled stocks in Japan sharply lower, with the Nikkei 225 falling 1.52% on the session to 22,977.13 points, while the region-wide MSCI ex-Japan benchmark fell 1.23% into the final hours of trading.