Friday November 18th


Stock futures rise as investors assess the prospect of higher interest rates

U.S. stock markets index futures rose Friday as investors continued evaluating earnings reports and tougher language from Federal Reserve speakers. Futures tied to the Dow Jones Industrial Average climbed 80 points, or 0.2%. The S&P 500′s futures traded higher by 0.4%, while Nasdaq-100 futures advanced 0.5%. Ross Stores and Palo Alto Networks popped after the two companies posted their latest quarterly results. Investors also appeared to cheer Gap’s most recent results. Friday’s moves come after a down session on Wall Street after comments from Federal Reserve officials raised concern over tighter U.S. monetary policy. St. Louis Federal Reserve President James Bullard said Thursday that “the policy rate is not yet in a zone that may be considered sufficiently restrictive.” He suggested that the appropriate zone for the federal funds rate could be in the 5% to 7% range, which is higher than what the market is pricing. Investors have responded to each new piece of economic data or any language in recent weeks that could indicate what the Fed will do next with interest rates, said Shelby McFaddin, investment analyst at Motley Fool Asset Management. In this case, she said the comments on inflation led investors to believe the Fed does not think the economy has cooled enough. “There’s absolutely been a thirst for relief and a tug of war,” she said of investor response over recent days. “But at the end of the day, it really just depends on this inflationary period becoming deflationary slower than it ramped up, and on what the Fed decides to do next.” Investors will watch Friday for data on existing home sales for any indication of a cooling economy. Boston Fed President Susan Collins will speak in the morning. Shares in the Asia-Pacific traded mixed as Japan’s core consumer price index for October rose 3.6% compared to a year ago, higher than expected and at the fastest pace in 40 years. The nation last saw the same level in February 1982, Refinitiv data showed. The Nikkei 225 fell 0.11% to close at 27,899.77, while the Topix ended its session at 1,967.03. South Korea’s Kospi was fractionally higher to close at 2,444.48. The S&P/ASX 200 in Australia gained 0.23% to end its session at 7,151.8. The Hang Seng Index erased earlier gains and closed its session 0.29% lower at 17,992.54. In mainland China, the Shanghai Composite ended its session 0.58% lower at 3,097.24 and the Shenzhen Component fell 0.37% to close at 11,180.43. Oil gave up early gains on Friday and was on track for a second weekly decline, pressured by concern about weakening demand in China and further interest rate rises by the U.S. Federal Reserve. China, which sources say is looking to slow crude imports from some exporters, has seen a rise in Covid-19 cases, while hopes for the moderation of aggressive U.S. rate hikes have been dented by remarks from some Fed officials this week. “As things stand, bullish price drivers are in short supply,” Stephen Brennock of oil broker PVM said. “Yet with the EU embargo on Russian crude less than three weeks away, oil prices could still end the year with a bang.” Brent crude was down 76 cents, or 0.9%, to $89.02 a barrel, having touched a 4-week low of $89.16 earlier. U.S. West Texas Intermediate (WTI) crude was down 41 cents at $81.23. Both benchmarks are heading for a second weekly loss. Brent is on track for a decline of more than 7%, while WTI is down 8.7%. Gold prices edged up on Friday on a pullback in the dollar but were still bound for their first weekly decline in three, weighed down by signals from U.S. central bankers that more interest rate hikes were on the way. Spot gold rose 0.1% to $1,763.17 per ounce by 0303 GMT, en route to a weekly decline of about 0.4%. U.S. gold futures were up 0.2% to $1,765.50.