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U.S. equity futures nudged lower in early Friday trading, while the dollar added to gains against its global peers, as investors took a cautious outlook into the final trading day of the week amid concerns over the health of the global economy.
Stocks ended with a twin set of record highs last night as the S&P 500 surged 95 points, or 1.17%, to close above the 5,700 mark for the first time thanks in part to outsized gains for megacap tech stocks.
The Dow Jones Industrial Average also closed at an all-time peak of just over 42,000 points while the Nasdaq surged 2.5% as markets digested Wednesday’s dovish Federal Reserve rate decision while eyeing better-than-expected weekly jobs data.
An after-hours earnings report from package delivery giant FedEx (FDX) , however, as well as a gloomy near-term outlook from another European automaker, this time Mercedes-Benz, has investors in ‘risk-off’ mode heading into the opening bell.
FedEx, a good global activity bellwether, slashed its full-year profit forecast last night.
FedEx, often seen as a good barometer for global business activity, slashed its full-year profit forecast after a disappointing July quarter update, sending shares 12.3% lower in premarket trading.
Mercedes-Benz Group, meanwhile, said weakness in China would continue to pressure profit margins and cut its full-year profit outlook amid what CEO Ola Kaellenius described as “a tremendous amount of cautiousness” in the global auto market.
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On Wall Street, traders will also eye both the quarterly rebalancing of major stock benchmarks, including the S&P 500, as well as the regular ‘triple witching hour’ expiration or around $5 trillion worth of equity market options later in the session.
All that said, the market’s main volatility index, the VIX, was marked 10% lower in after-hours trading at $16.41, a level that suggests daily swings for the S&P 500 of around 58 points each day for the next month.
Heading into the start of the trading day, futures contracts tied to the S&P 500 suggest a 14 point opening bell decline, while those linked to the Dow are priced for a modest 10 point dip.
The tech-focused Nasdaq, meanwhile, is called 78 points to the downside.
In overseas markets, Europe’s Stoxx 600 was marked 0.68% lower in early Frankfurt trading, with Britain’s FTSE 100 falling 0.72% in London.
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Overnight in Asia, two policy decisions defined the session, with the People’s Bank of China making no major changes to its main suite of interest rates, a move that kept the on-shore yuan trading at the highest levels in 16 months.
The Bank of Japan, meanwhile, held its key short-term rate unchanged at 0.25%, with Governor Kazuo Ueda noting that “we can afford to spend some time in making a policy decision” going forward give the broader range of global economic uncertainties.
The Nikkei 225 ended 1.53% higher on the session while the MCSCI ex-Japan index was marked 0.79% heading into the close of trading.
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