US equity futures are slightly lower as markets look to take a breather after making a new intraday all-time high in the US and Europe on Wednesday. As of 7:30am, S&P futures dipped 0.1% after the index closed on the brink of record peak, propelled by optimism over - what else - artificial intelligence, and a solid batch of earnings from corporate heavyweights. Nasdaq 100 futures fell 0.5% with all Mag7 names lower ex-META and Semis also weaker with NVDA/AVGO lower. Bond yields are higher, with the 10Y rising 2bps to session highs at 4.64% the highest since Jan 16, while the USD also rose. The commodity complex is under pressure with the exception of energy as WTI trades near session highs around $79.4. Today's macro data focus is on jobless data and regional activity indicators ahead of tomorrow's Flash PMIs.
In premarket trading, Electronic Arts shares plunge 15% after the video-game company cut its full-year net bookings guidance to a range that's below analyst expectations, with EA Sports FC 25 and Dragon Age: The Veilguard both underwhelming. Several analysts downgraded the stock. Semiconductor stocks drop as Korean memory chipmaker SK Hynix's record quarterly results failed to impress investors. Potential US export controls have also weighed on the sector in recent days (Nvidia (NVDA US) -1.9%, Micron Technology (MU US) -3.7%, Arm (ARM US) -4.4%, Applied Materials (AMAT US) -1.3%, Lam Research (LRCX US) -1.4%). Mag 7 stocks also dropped (Apple -0.3%, Nvidia -1.9%, Microsoft -0.8%, Alphabet -0.2%, Amazon -0.5%, Meta Platforms +0.6% and Tesla -0.5% in premarket trading). Here are some other notable premarket movers:
Markets started the year in an upbeat mood amid relief that Trump has so far held off on imposing tariffs on trade partners in his first few days in office, despite threatening levies on China, Mexico, Europe and China. That said, the rally that took stocks to new all time highs on the back of AI stocks amid collapsing breadth, showed some signs of flagging as investors took stock of President Trump's first few days in office. While his move to boost AI spending buoyed tech megacaps on Wednesday, the risk of tariffs on major trading partners still weighs on sentiment. The S&P 500 index has climbed about 5% since Trump's election victory on Nov. 6.
"We continue to expect near-term volatility as markets react to incoming Trump headlines, and see negative impact on targeted regions if the administration follows through with the proposed tariffs," said Mark Haefele, chief investment officer at UBS Global Wealth Management. "But we also believe US equities have room to grind higher as growth momentum continues."
Focus on Thursday will next turn to US jobless-claims data, as well as Trump's address at the World Economic Forum in Davos and fourth-quarter earnings reports from companies including General Electric Co., American Airlines Group Inc. and Texas Instruments Inc.
Still, there are signs the rally could be overheating with valuations at sky-high levels, especially those of tech behemoths.
"There's a loss of momentum," said Paul Jackson, global head of asset allocation research at Invesco, "There's a lot of hope, a lot of good news already priced in the US markets."
The Stoxx Europe 600 index was little changed after coming within a hair's breadth of an all-time high on Wednesday. Technology shares fell more than 1%, giving up most of the previous day's advance as they underperformed every other industry group in the index. Puma plunged after reporting disappointing figures, while Sweden's EQT and Swedbank both jumped on their respective earnings. Here are the biggest movers Thursday:
Asian stocks were mixed, with Chinese shares edging higher after a government push for long-term funds to raise holdings in the market. Korea led regional losses, weighed down by SK Hynix's stock after it reported earnings. The MSCI Asia Pacific Index pared advances of as much as 0.4% to trade little changed. Japanese firms including SoftBank Group and Mitsubishi Heavy Industries were among the biggest contributors to the gauge's climb. Japanese stocks rose for a fourth day, tailing gains posted by US technology companies, which are expected to lead large-scale investments in artificial intelligence. The Bank of Japan is widely expected to raise its benchmark rate Friday by the most in 18 years. Chinese equities received a boost after authorities said they are guiding local mutual funds and insurers to raise investments into stocks in latest efforts to shore up its ailing market. The onshore benchmark CSI 300 Index rose as much as 1.8%, before ending the day 0.2% higher.
In FX, the Bloomberg Dollar Spot Index is steady. The yen inches higher with some help from a Nikkei report that said the Bank of Japan are set to raise rates on Friday. The Norwegian krone falls 0.2% after the Norges Bank left interest rates on hold as expected and stuck with its guidance for a reduction in March.
In rates, treasuries dip, with 10-year yields up 2bps to 4.64%, and slightly cheaper vs bunds and gilts. Front-end outperformance steepens 2s10s spread by around 2bp to 33bp, near weekly high. Bunds and gilts also edge lower with little economic data in Europe to dictate otherwise.
In commodities, oil prices are higher, with WTI around $75.40 a barrel. Spot gold falls $7 to ~$2,749/oz. Bitcoin falls 2% to below $102,000.
The US economic data calendar includes weekly jobless claims (8:30am) and January Kansas City Fed manufacturing activity (11am).
A more detailed look at global markets courtesy of Newsquawk
APAC stocks traded somewhat mixed albeit with a mostly positive bias after the gains on Wall St where the S&P 500 printed a fresh record high and the Nasdaq led amid strength in tech and communications, while outperformance was seen in mainland China after Beijing announced efforts to support the stock market in a capital markets briefing. ASX 200 was pressured by underperformance in miners following several quarterly production updates, with tech and telecoms the only sectors that showed some resilience. Nikkei 225 climbed above the 40,000 level following recent yen weakness and mostly better-than-expected trade data. Hang Seng and Shanghai Comp were both initially underpinned with brokerage stocks lifted after the capital markets briefing in Beijing where officials from the CSRC, financial regulator and PBoC announced efforts to boost stocks with China to direct medium and long-term funds towards market investment, while there will be at least hundreds of billions of yuan of new long-term capital for A-shares every year from state-owned insurance companies. However, the Hong Kong benchmark eventually gave back the gains.
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European bourses (Stoxx 600 -0.1%) began the session mixed, continuing the indecisive mood seen in APAC trade overnight. Price action has generally moved sideways throughout the morning, given the lack of EZ-specific updates. European sectors are mixed, and aside from the day's clear underperformer (Tech), the breadth of the market is fairly narrow. Tech underperforms following SK Hynix results; the co. reported strong Q4 figures, but highlighted concerns regarding demand declines in commodity memory chips. Banks top the pile, joined closely by Utilities and Telecoms.
Markets continued to advance over the last 24 hours, with the S&P 500 (+0.61%) closing just -0.06% beneath its all-time high in early December. That was driven by another batch of strong earnings results, which led to growing optimism about the economic outlook over the next couple of years. In fact, the latest gains mean the S&P 500 is now up +3.48% in 2025 already, making this the strongest start to a year since before the pandemic in 2019, when the S&P was up by +5.03% at this point. Over in Europe it was a similar story, with the STOXX 600 closing just a whisker beneath its own record high from late-September.
Tech stocks were driving those gains yesterday, with Netflix (+9.69%) posting the largest advance in the S&P 500 after announcing the biggest quarterly subscriber gain in their history. Otherwise, Procter & Gamble (+1.87%) also had a strong day, as their quarterly sales beat expectations for the first time in over a year. And the Magnificent 7 (+1.32%) outperformed as well, led by Nvidia (+4.43%). That came amid broad gains for AI-related stocks, with Oracle (+6.75%) and OpenAI's partner Microsoft (+4.13%) advancing after unveiling the AI investment partnership with President Trump the previous evening. However, unlike recent days, the rally didn't have much breadth to it, with nearly two-thirds of the S&P 500 lower on the day and the equal-weighted version (-0.37%) ending a run of 6 consecutive gains. So even as the overall index almost hit a new record, it was a narrow rally led by tech stocks, of the sort we've been used to over 2023 and 2024.
We'll hear a lot more on the earnings front next week, including from Apple, Microsoft, Amazon, Meta and Tesla. But in the meantime, investors are still heavily focused on the new Trump administration and how it's going to pursue the implementation of tariffs. In terms of the last 24 hours, Trump did make a post on Truth Social about Russia, saying that if a deal weren't made to settle the war, he would "have no other choice but to put high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States, and various other participating countries." The comments confirm suggestions that the new administration might take tougher sanctions measures against Russia, even if they might be less willing to provide more military aid to Ukraine. Otherwise, there weren't any fresh developments on tariffs yesterday, so the focus now turns to the February 1 tariff deadline that Trump suggested earlier this week.
Given the risk-on tone for markets, US Treasury yields also moved higher yesterday, with the 10yr yield up +3.5bps to 4.61%. In part, that was because of some growing doubts about whether the Fed would still cut rates by much (if at all) this year, particularly with the S&P 500 nearing new highs and financial conditions easing over recent weeks. But overall, it wasn't a particularly big move, and the focus is increasingly turning to the Fed's decision next week, and how Chair Powell is set to describe the outlook.
Meanwhile in Europe, the STOXX 600 (+0.39%) posted a 6th consecutive advance, which meant it closed just -0.008% beneath its own record high from late-September. And in Germany, the DAX (+1.01%) hit a new record once again, meaning its YTD gains now stand at +6.76%, the strongest of any major global equity index. That came alongside an increasingly optimistic tone in Europe, with the Franco-German 10yr yield spread down to its tightest in over two months, at 74bps, whilst Euro IG credit spreads are at their tightest in three years as well, at 96bps.
Elsewhere, we heard from several ECB speakers ahead of next week's decision. Austria's Holzmann suggested that it would be better "to wait a bit more" before the next rate cut, but there was no other pushback against a widely expected 25bps cut next week. ECB President Lagarde described the central bank as "on this sort of regular, gradual path", while Spain's Escriva said that a 25bp cut "feels like this is the most likely scenario" and Dutch central bank governor Knot noted that he was "pretty comfortable with the market expectations (for rate cuts in January and March)". In all, those comments weren't much of a surprise, and European rates traded in line with the global pattern for the most part, with yields on 10yr bunds (+2.1bps) and BTPs (+1.2bps) both moving higher, although French OATs (-0.7bps) outperformed.
Overnight in Asia, the market rally has continued for the most part, with Chinese equities leading the way, including the CSI 300 (+1.07%) and the Shanghai Comp (+1.35%). That's been supported by comments from the China Securities Regulatory Commission, whose chairman said that mutual funds should increase their onshore equity holdings by at least 10% each year for the next 3 years. So for equity markets, that helped to offset concern about potential tariff threats. However, South Korean equities have underperformed this morning, with the KOSPI down -0.72%. That comes as South Korea's growth data was weaker-than-expected overnight, with Q4 GDP only up by +0.1% (vs. +0.2% expected), and annual GDP for 2024 was up +2.0% (vs. +2.1% expected). That continues a pattern of pretty flat growth in recent quarters, with a -0.2% contraction in Q2, followed up by +0.1% growth in Q3 and Q4.
Over in Japan, the focus is increasingly turning to the Bank of Japan's decision tomorrow, where markets are increasingly expecting another rate hike. Indeed, if they do announce a 25bp hike as expected, that would be the biggest hike since 2007, so it would continue the path towards monetary policy normalisation we've seen over the last year. In the meantime, the December trade data overnight showed that Japan's trade surplus with the US was at ¥8.6 trillion in 2024, only slightly beneath the ¥8.7 trillion in 2023. Otherwise, the Nikkei (+0.97%) has continued to advance this morning, and its weekly advance of +4.11% as it stands would be its biggest since late September. Looking forward, US equity futures are only slightly lower, with those on the S&P 500 down -0.08%.
To the day ahead now, and data releases include the weekly initial jobless claims in the US, along with the European Commission's preliminary consumer confidence reading for January in the Euro Area. Otherwise from central banks, we'll hear from the ECB's Escriva.