Global Stocks Waver Amid Hopes for Rate Cut

Date : 07/19/2019 @ 1:36PM
Source : Dow Jones News

Global Stocks Waver Amid Hopes for Rate Cut

By Nathan Allen 

--S&P 500 futures tick higher following mixed trading in Asia, Europe

--Brent crude gains amid U.S.-Iran tensions over downed drone

--Microsoft climbs in premarket trading after posting record revenue

Major stock markets were mixed Friday after a Federal Reserve official made comments that seemed to strengthen the case for an interest-rate cut.

S&P 500 futures rose less than 0.1%. Europe's major equity benchmark wavered between tepid gains and losses, while most major Asian indexes posted advances.

U.S. stocks closed higher Thursday after New York Fed President John Williams said central banks must take swift action when faced with adverse economic conditions, which some investors interpreted as signaling a 0.5% rate cut in July. However, the bank later said Mr. Williams didn't intend to signal any specific policy changes.

The yield on the 10-year Treasury note rose to 2.045% on Friday, while the 2-year note yield, sensitive to shifting expectations for Fed policy, ticked up to 1.781%, according to data from FactSet. The short-term Treasury yields had fallen sharply following those remarks.

"Given that a 50-basis-point cut would trigger a further rally in global equities, any remark of dovish nature translates immediately into higher asset prices," said Ipek Ozkardeskaya, a senior analyst at London Capital Group.

The WSJ Dollar Index climbed almost 0.3% to 89.90.

Meanwhile, shares in Microsoft were up about 3% in premarket trading after the world's most valuable public company said late Thursday that its cloud-computing business drove revenue to a record in the most-recent quarter. Its profit also beat expectations.

Friday is poised to be another big day for investors in financial stocks, with a number of firms including American Express and State Street reporting second-quarter results. State Street rose 1.3% in premarket trading minutes after its earnings were announced. American Express shares edged down 0.3% after it released its quarterly results.

Investors will also be watching for University of Michigan's July consumer confidence data. Economists surveyed by The Wall Street Journal forecast the consumer sentiment index logged in at 99.0 in the beginning of July, up slightly from 98.2 at the end of June. Such a rise could reduce the likelihood of a large rate cut by the Fed at the end of the month and provide some support for the U.S. dollar, Rabobank said.

Meanwhile, global oil benchmark Brent crude rose 1.5%, rebounding from the month's lows and marking a second day of volatility in the prices. Iran denied that the U.S. Navy downed one of its drones in the Strait of Hormuz, following several close encounters between American warships and the Iranian military on Thursday in the vital oil shipping route that have further raised tensions between the nations.

In Europe, the automotive, chemical and food-and-beverage companies were among gainers on the pan-continental Stoxx Europe 600 index, which was mostly flat following a two-day losing streak.

France's Publicis Groupe dropped 8.6% after the advertising giant cut its outlook, prompting a downgrade from analysts at Liberum.

Brewer Anheuser-Busch InBev was among Europe's biggest gainers, rising nearly 5% after the Budweiser maker agreed to sell its Australian subsidiary to Japan's Asahi Group Holdings in an $11.3 billion deal in an effort to pare its debt load.

In Asia, most benchmark gauges traded higher. Hong Kong's Hang Seng Index rose more than 1%, buoyed by consumer-goods companies.Japan's Nikkei 225 index climbed 2%.

-- Lauren Almeida contributed to this article


(END) Dow Jones Newswires

July 19, 2019 08:21 ET (12:21 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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