(Bloomberg) – Stocks struggled for direction as investors dealt with a busy day for corporate earnings and renewed signs of strength in the US and UK economies that could warrant further rate hikes.
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SAP SE fell Friday after it reported lower-than-expected sales at its main cloud unit, dragging technology stocks down and making it Europe’s worst-performing sector. Bioprocessing company Lonza Group AG cut its outlook for 2023 and fell. Commitments in U.S. stocks signaled a recovery after Thursday’s tech-heavy Nasdaq 100 index fell for the first time in nearly five months.
Earnings in Europe are off to a slow start, with weaker results than in previous quarters, and only the biggest companies are posting strong profits. Morgan Stanley said companies were more cautious in their forward guidance, with references to “weak demand” at a record high. In the U.S., the Nasdaq 100 Index’s record gains plummeted this week following disappointing reports from Netflix and Tesla.
“Equity markets have begun to digest the first round of disappointing results, abruptly interrupting an otherwise great year for equities,” Mizuho International strategists Evelyn Gomez-Lichti and Helen Rodriguez said in a note.
The lackluster results contrast with signs of resilience in the US and UK economies, where central banks have already declared victory in the fight against inflation and are raising questions about whether they can curb the rate hike cycle.
UK retail sales beat expectations in the warmest June on record, according to data released on Friday. An unexpected drop in US unemployment claims on Thursday increased the chances of another rate hike beyond next week’s Federal Reserve meeting.
The pound rallied after UK retail sales expanded, Thursday’s Bloomberg data on the U.S. dollar rose, and U.S. Treasury yields stabilized.
The Bloomberg Commodity Index is set to rise for the third time in a week after rising wheat prices after escalating tensions between Russia and Ukraine in the Black Sea. Natural gas futures in Europe and the U.S. are also expected to rise nearly 10% this week as the scorching heat boosts demand for electricity for air conditioning. Gold is set to drop from a two-month high on the recent strength of the dollar, while oil is expected to post its fourth weekly gain.
The main movements in the market are:
stock
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Stoxx Europe 600 almost unchanged at 9:54am London time
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S&P 500 Futures Gain 0.2%
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Nasdaq 100 Futures Gain 0.4%
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Dow Jones Industrial Average futures gain 0.1%
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MSCI Asia-Pacific Index Falls 1.5%
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MSCI Emerging Markets Index Falls 1.8%
currency
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Bloomberg Dollar Spot Index gains 0.3%
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The euro remained unchanged at $1.1130.
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The Japanese yen fell 1.3% to 141.90 yen to the dollar.
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The offshore yuan fell 0.2 percent to 7.1863 to the dollar.
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The British pound fell 0.1% to $1.2855.
Cryptocurrency
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Bitcoin climbs 0.2% to $29,803.33
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Ether rises 0.2% to $1,892.26
bond
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The 10-year government bond yield remained almost unchanged at 3.85%.
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German 10-Year Bond Yield Barely Changed at 2.49%
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UK 10-year bond yields rose 3 basis points to 4.30%.
merchandise
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Brent crude rises 0.7% to $80.20 a barrel
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Gold spot fell 0.4% to $1,962.62 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With help from Rob Verdonck and Tassia Sipahutar.
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