Shrugging off its near heart attack early last week, Wall St seems to like the current constellation.
After Thursday’s roaring stock rally, S&P500 futures are higher again on Friday and the index looks set to record its best week of the year with gains of almost 4%.
And Treasuries were only mildly put off by the reset of Fed expectations – with two-year yields returned back above 4% on Thursday and holding there early today. The dollar index firmed up in tandem.
Perhaps reflecting more sustainable times ahead, the negative daily correlation between stocks and bonds that’s returned since Aug 1 has been sustained just as the VIX volatility index returns just below its historic median.
The overseas market mood was similarly ebullient, with Japan’s Nikkei surging again on Friday – gaining more than 3% to record a spectacular weekly bounceback from Aug 5’s yen-related turbulence that now ranks as its best week in more than four years.
Thursday’s second-quarter GDP beat from Japan has helped and the yen easing back a bit.
Despite a more mixed economic picture in Europe – sapped in part by China’s ongoing economic stumble – European stocks also caught Wall Street’s slipstream on Friday to stay on track for their best week in three months.
Chinese stocks were firmer too after Thursday’s interview with central bank governor Pan Gongsheng indicated the bank will will stick to a supportive monetary policy.
Sterling was an outperformer on currency markets after data showed British retail sales rebounded 0.5% in July, in line with expectations.
Next up stateside on Friday is July’s housing starts report, with the corporate earnings diary thinning out.
In company news, Applied Materials forecast fourth-quarter revenue slightly above estimates after the bell on Thursday, anticipating a surge in AI-fueled demand for its chip-making equipment.
But shares of the Santa Clara, California-based company were down 2.8% in extended trading after having closed about 5% higher on Thursday.
