US futures rise, S&P 500 on track for strong week

by Margaryta Kirakosian

US futures gained, with the S&P 500 on track for one of its best weeks this year, as easing trade tensions between the US and China buoyed appetite for risky assets and traders bet the Federal Reserve will step in to avoid a recession.  

Contracts on the S&P 500 climbed 0.3%, after the index closed up 4.5% for the week on Thursday as the latest economic data spurred speculation the Fed will cut interest rates twice this year. Europe’s benchmark Stoxx 600 gauge also gained, heading for a fifth weekly advance.

US equities are back in favor following the de-escalation of trade tensions between the US and China. They’re now trading like last month’s rout never happened, even though uncertainty remains about the effect of tariffs on the US economy and the direction that the global trade war will take in the coming months. 

“For now, we believe that the path of least resistance is still higher for risky assets,” said Mohit Kumar, chief economist and strategist at Jefferies International. “We would start turning a bit more cautious around June/July when we expect the hard data start weakening.”

The dollar weakened for a second session against major peers, with the yen and Swiss franc among the beneficiaries. The 10-year Treasury yield was lower after declining 10 basis points Thursday as traders added bets on Fed rate cuts. 

Later Friday, traders will be watching negotiations around the US budget with its promise of large tax cuts and a potential impact that will have on the fiscal deficit.  

Among individual movers in Europe, Richemont SA jumped 5.5% after the Cartier owner posted a sales rise. Earlier in Asia, Alibaba Group Holding Ltd. shares fell as much as 6.7% after quarterly revenue disappointed. 

Elsewhere, Japan’s economy shrank for the first time in a year, illustrating its vulnerability even before sustaining the impact of Trump’s tariff measures. The yen gained 0.2% on Friday to trade around 145 per dollar. Bank of Japan official Toyoaki Nakamura, the most dovish board member, warned against hurrying to raise the benchmark interest rate.

In commodities, gold fell to extend its weekly loss as demand for haven assets waned. Oil prices declined after Iran’s foreign minister cast doubts on the status of US-Iran nuclear talks.

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.6% as of 10:02 a.m. London time
• S&P 500 futures rose 0.3%
• Nasdaq 100 futures rose 0.3%
• Futures on the Dow Jones Industrial Average rose 0.3%
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.1% to $1.1201
• The Japanese yen rose 0.3% to 145.28 per dollar
• The offshore yuan was little changed at 7.2040 per dollar
• The British pound was little changed at $1.3304

Cryptocurrencies

• Bitcoin was little changed at $103,438.06
• Ether rose 1.4% to $2,572.1

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.41%
• Germany’s 10-year yield declined four basis points to 2.58%
• Britain’s 10-year yield declined five basis points to 4.61%

Commodities

• Brent crude was little changed
• Spot gold fell 1% to $3,206.45 an ounce

This story was produced with the assistance of Bloomberg Automation.

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