U.S. stock futures advanced on Friday morning, continuing the positive momentum from the previous session as investors closely watched for developments in U.S.-China trade relations. The market is anticipating a key phone call between the leaders of both nations, which could influence global trade dynamics and the future of major technology companies.
The S&P 500 E-Mini futures (ESU25) saw a gain of 0.17%, signaling a potentially strong opening for Wall Street. This movement comes after major indices, including the S&P 500, Nasdaq 100, and the Dow Jones Industrial Average, all closed at new record highs in the prior trading session.
Key Takeaways
- U.S. stock futures are trading higher, with S&P 500 E-Minis up 0.17%.
- Investors are focused on an upcoming phone call between the U.S. and Chinese presidents regarding trade and technology.
- Wall Street is preparing for a significant "triple-witching" options expiration event, with approximately $6.3 trillion in contracts set to expire.
- European markets gained, led by auto stocks, while Asian markets closed lower on profit-taking and central bank policy news.
- Recent U.S. economic data presented a mixed picture, with strong manufacturing and labor market figures but a weaker leading economic index.
US Markets Await High-Stakes Diplomatic Call
Market sentiment on Friday is heavily influenced by a scheduled phone call between U.S. President Donald Trump and Chinese President Xi Jinping. The conversation, set for 9 a.m. Washington time, is expected to cover critical topics, including the future of the social media application TikTok and broader trade tensions.
According to strategists at Danske Bank, a potential deal for TikTok could serve as a catalyst for improving the relationship between the world's two largest economies. An easing of trade friction would be a significant positive for global markets.
This diplomatic event follows a strong performance on Wall Street. On Thursday, major benchmarks reached new peaks, driven by significant gains in the technology sector.
Major Stock Movements from Thursday
Several companies saw substantial price changes in the previous session. Intel (INTC) shares surged over 22% after Nvidia announced a $5 billion investment as part of a partnership. Cybersecurity firm CrowdStrike Holdings (CRWD) rose more than 12% following a strong revenue forecast. In the biopharmaceutical sector, 89bio (ETNB) soared over 85% on news of its acquisition by Roche for $3.5 billion. Conversely, FactSet Research Systems (FDS) declined by more than 10% after reporting disappointing earnings and guidance.
Economic Indicators and Federal Reserve Outlook
Recent economic data has provided a mixed but generally positive view of the U.S. economy. A report on Thursday showed the Philadelphia Fed manufacturing index climbed to 23.2 in September, an eight-month high and far exceeding the forecast of 1.7.
The labor market also showed strength, with initial jobless claims falling by 33,000 to 231,000 for the week, below the anticipated 241,000. However, the Conference Board's leading economic index for August fell by 0.5%, a larger decline than the expected 0.2% drop.
"The Federal Reserve is cutting interest rates during a time when stocks are at record highs and the economy is still growing. This dynamic is bullish for stocks," said Robert Schein, an analyst at Blanke Schein Wealth Management.
Market expectations reflect this sentiment. U.S. rate futures indicate a 91.9% probability of a 25 basis point interest rate cut at the Federal Reserve's next meeting in October.
Understanding Triple-Witching
Wall Street is also bracing for a quarterly event known as "triple-witching." This occurs when derivatives contracts tied to stock index futures, stock index options, and stock options all expire on the same day. This September's event is particularly large, with options linked to an estimated $6.3 trillion in assets set to expire, making it one of the three largest on record.
Despite the massive value, some analysts are downplaying its potential market impact. "The quarterly option expiry is increasingly becoming a non-event, especially when volatility is low," noted Garrett DeSimone, head quant at OptionMetrics. He added that significant price jumps on the Monday following the expiry are not expected.
Global Market Performance
Across the Atlantic, European markets showed strength on Friday. The Euro Stoxx 50 Index was up 0.42%, with automobile and banking sectors leading the gains. Shares of Stellantis NV climbed more than 4% after Berenberg upgraded the stock to a Buy rating.
European and Asian Market Highlights
- United Kingdom: Data revealed that monthly retail sales in August rose by 0.5%, surpassing expectations and providing a boost to the economy.
- Germany: Producer prices fell by 2.2% year-over-year in August, a sharper decline than anticipated.
- China: The Shanghai Composite Index closed down 0.30% as investors took profits ahead of the U.S.-China call. Semiconductor and insurance stocks saw declines.
- Japan: The Nikkei 225 Stock Index fell 0.57%. The Bank of Japan announced it would begin selling its extensive holdings of exchange-traded funds (ETFs), valued at over 75 trillion yen ($508 billion).
The Bank of Japan kept its main policy rate unchanged but signaled a commitment to policy tightening. This move came as data showed Japan's core inflation, while easing slightly in August, remained above the central bank's 2% target at 2.7%.
Pre-Market Movers in the U.S.
Several U.S. stocks were active in pre-market trading on Friday.
- FedEx (FDX) shares climbed over 4% after the logistics company reported better-than-expected first-quarter results and reinstated its full-year guidance.
- Tesla (TSLA) gained more than 1% after Baird upgraded the electric vehicle maker's stock to Outperform from Neutral.
- Lennar (LEN) shares fell more than 2% after the homebuilder's third-quarter results and fourth-quarter guidance disappointed investors.
- MetLife (MET) slid over 1% following a downgrade from Piper Sandler to Neutral from Overweight.
As the trading day begins, investors will remain focused on geopolitical developments, particularly the outcome of the U.S.-China discussion, while also managing the technical market dynamics of the triple-witching expiration.
