US stock futures falter as bank profits rise: Markets pull back

(Bloomberg) – U.S. stock futures fluctuated as JPMorgan Chase & Co. launched major earnings reports for major Wall Street banks. Bonds rose, led by UK gilts who benefited from reports that the government was preparing to scrap parts of its controversial tax cut plans.

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Contracts on the S&P 500 and Nasdaq 100 swung between losses and gains as corporate earnings began to roll. JPMorgan shares rose in premarket trading after beating Wall Street’s earnings and revenue targets. Shares of Morgan Stanley fell about 3% as equity trading revenue missed estimates.

U.S. banks are expected to post the biggest drop in earnings of any sector in the S&P 500 index, according to data compiled by Bloomberg Intelligence. The fear is that Fed tightening will trigger defaults and force banks to build higher provisions against losses.

“While investors can look through a disappointing CPI print, it will be a much higher bar to look through weak corporate earnings.” Invesco’s global market strategist David Chao told clients. “Growth is below trend and slowing because the Fed continues to tighten. This is a difficult backdrop for risk assets.

In Britain, the pound remained lower, but government bonds rallied strongly following reports that Prime Minister Liz Truss planned to roll back parts of her tax cut package.

His plans rattled UK markets for weeks, forcing the Bank of England to launch an emergency bond-buying programme. This program expires later on Friday.

“It seems pretty clear that the government is plotting a reversal on at least a very large part, if not half, of the permanent tax cuts in the budget,” BlackRock Inc. chief macro strategist Rupert Harrison told Bloomberg. . Television. “And if we don’t get that, the markets will react very negatively.”

Ten-year gilt yields fell 22 basis points while London’s FTSE stock index jumped 1.2%.

Read more: Banking results will give clues to the market’s next move: earnings watch

Tech stocks continued to weaken in premarket trading as Jefferies became the latest bank to highlight the impact of rising rates and U.S. restrictions on shipments to China.

Elsewhere, oil headed for weekly losses as signs of a global economic slowdown and tighter monetary policy threaten to undermine energy consumption. The International Energy Agency had previously warned that crude production cuts agreed by the OPEC+ group risked triggering a price spike that would tip the global economy into recession.

Crypto assets gained, with Bitcoin hitting a 1-week high, within range of breaking above the $20,000 level.

Some of the major movements in the markets:

Shares

  • S&P 500 futures were little changed at 8:04 a.m. PT

  • Nasdaq 100 futures fell 0.2%

  • Dow Jones Industrial Average futures are little changed

  • The Stoxx Europe 600 rose 1.1%

  • The MSCI World index rose 0.5%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.5%

  • The euro fell 0.6% to $0.9719

  • The British pound fell 1.1% to $1.1196

  • The Japanese yen fell 0.4% to 147.76 per dollar

Cryptocurrencies

  • Bitcoin rose 1.3% to $19,632.05

  • Ether rose 2.6% to $1,327.65

Obligations

  • The yield on 10-year Treasury bills fell six basis points to 3.88%

  • Germany’s 10-year yield fell nine basis points to 2.20%

  • The UK 10-year yield fell 22 basis points to 3.98%

Goods

  • West Texas Intermediate crude fell 1.8% to $87.53 a barrel

  • Gold futures fell 0.9% to $1,662.40 an ounce

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