U.S. equity futures and market reactions

U.S. equity futures continued to rise on Thursday, bolstered partly by further gains in the tech sector and a decrease in Treasury bond yields, as investors responded to dovish rate indications from the Federal Reserve while anticipating earnings from Apple and Amazon following the market close.

Significant tech movements, especially within the chip sector, enabled both the Nasdaq and the S&P 500 to achieve their largest single-day gains since February yesterday. Nvidia experienced a remarkable increase, adding a historic 0 billion in market capitalization due to a 12.8% jump.

Fed Chairman Jerome Powell’s indication that a rate cut in September may be considered, provided that jobs and inflation data continue to align with the central bank’s dual mandate, also contributed to broader market advances. The Fed maintained rates at a 22-year high, remaining between 5.25% and 5.5%.

Benchmark 10-year Treasury bond yields have declined by over 25 basis points (0.25 percentage point) since the last Fed meeting in July, retreating to 4.055% in overnight trading, while 2-year notes were set at 4.284%.

CME Group’s FedWatch shows that traders have secured bets for a September rate cut, with the probability of a 50-basis-point adjustment estimated at 13.5%.

With today’s session expected to concentrate on June-quarter updates from Apple and Amazon after the market closes, last night’s earnings report from Meta Platforms exceeded expectations and is propelling shares of the Facebook parent substantially higher.

The company reported a revenue figure of .1 billion that surpassed Wall Street’s estimates, attributed partly to what it described as “healthy global advertising demand,” and issued a strong near-term outlook that may counterbalance its ramp-up in AI expenditures.

Meta shares rose by 7.2% in premarket trading and are on pace to increase market value by around billion.

As the trading day begins, the S&P 500, which finished July with a 1.13% increase, is expected to open with a 19-point gain, while the Dow Jones Industrial Average is anticipated to rise by 61 points.

The tech-heavy Nasdaq, after a 0.75% drop in July, is projected to open 87 points higher.

Global market movements and analyst insights

In international markets, Britain’s FTSE 100 remained relatively stable ahead of a crucial Bank of England rate decision later in London, while the Stoxx 600 benchmark across Europe decreased by 0.38% as August trading began.

More Wall Street Analysts:

  • Analyst reassesses Nvidia stock price target following Blackwell insights
  • Analysts set new price targets for Walgreens stock post-earnings
  • Analyst revises stock price target for Facebook parent amid AI competition

Overnight in Asia, a sharp appreciation in the yen, which exceeded the 150 level against the U.S. dollar, curtailed gains for the Nikkei 225, which closed 2.49% lower in Tokyo.

The regional MSCI ex-Japan benchmark, however, was noted to be 0.45% higher as trading neared its conclusion.

Closer to home, the ASX 200 is projected to open positively, supported by the U.S. tech rally and dovish signals from the Federal Reserve. Australian investors will be keenly observing earnings reports from domestic tech giants and any updates from the Reserve Bank of Australia regarding interest rates.

Analysts are particularly bullish about the prospects for Australian mining stocks, given the recent rise in commodity prices. Iron ore and gold prices have remained robust, likely providing a boost for companies like BHP and Rio Tinto.

In the financial sector, Australian banks are anticipated to gain from the stable interest rate environment, with potential growth in mortgage lending and business loans. Nevertheless, any indications of inflationary pressure could lead to a reassessment of this outlook.

The global market movements and analyst insights indicate a cautiously optimistic outlook for the Australian market, with tech and mining sectors expected to take the lead.