US futures higher on Fed rate cut expectation

by John Viljoen and Kit Rees

US stock futures rose, with sentiment boosted by prospects the Federal Reserve may cut interest rates earlier than expected.

Contracts for the S&P 500 advanced 0.5%, setting up the benchmark index for its first four-day rally since January. Alphabet Inc. jumped 5.8% in premarket trading after its estimate-beating earnings. Europe’s Stoxx 600 index was 0.3% higher. 

The dollar strengthened, while the yen and Swiss franc retreated as investor demand for non-US haven assets waned. Gold slid 1.6%. Treasuries held their gains from Thursday. 

Fed Governor Christopher Waller said he’d support rate cuts in the event aggressive tariffs under President Donald Trump’s trade policies hurt the jobs market, speaking in an interview on Bloomberg Television. Cleveland Fed President Beth Hammack told CNBC the central bank could move on rates as early as June if it has clear evidence of the economy’s direction.

Markets currently favor a quarter-point cut in June and a total of three such reductions by year-end.

Investors were also tracking the latest news on the trade front. Bloomberg News reported that China is considering suspending its 125% tariff on some US imports. Following that report, Foreign Ministry spokesman Guo Jiakun reasserted that China isn’t in negotiations with the US over tariffs. 

“Progress in US-China relations is likely to be slow and bumpy, but further net positive newsflow is possible via trade deal announcements with other countries in the near term,” said Hani Redha, portfolio manager for global multi-asset at Pinebridge Investments. “This could still be sufficient to support markets in the near term. At least until the deterioration in economy data arrives.”

In Asian markets, stocks rose amid the broadly more positive tone around trade discussions. A gauge of the region’s equities on Friday erased all its losses since April 2, the day Trump announced his reciprocal tariffs.

On Thursday, Trump said his administration was talking with China, even as Beijing denied the existence of negotiations and demanded the US revoke all unilateral tariffs. The US and South Korea could reach an “agreement of understanding” on trade as soon as next week, said Treasury Secretary Scott Bessent. 

Elsewhere, stocks and bonds tumbled in India, as traders braced for a potential worsening of the geopolitical situation with neighboring Pakistan.

Indian shares were the worst performers in Asia on Friday, while the rupee and the nation’s bonds also slid, indicating growing angst among traders over any further ramping up of tensions between the two nuclear-armed nations.

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.3% as of 9:33 a.m. London time
• S&P 500 futures rose 0.5%
• Nasdaq 100 futures rose 0.5%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index rose 0.6%
• The MSCI Emerging Markets Index rose 0.5%

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%
• The euro fell 0.4% to $1.1350
• The Japanese yen fell 0.5% to 143.38 per dollar
• The offshore yuan was little changed at 7.2840 per dollar
• The British pound fell 0.4% to $1.3295

Cryptocurrencies

• Bitcoin rose 0.4% to $93,816.51
• Ether rose 0.8% to $1,777.16

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.30%
• Germany’s 10-year yield advanced two basis points to 2.46%
• Britain’s 10-year yield was little changed at 4.50%

Commodities

• Brent crude fell 0.1% to $66.48 a barrel
• Spot gold fell 1.5% to $3,299.70 an ounce

This story was produced with the assistance of Bloomberg Automation.

Copyright Bloomberg News