US Futures Ease on Google Risk, Murky Rate Outlook: Markets Wrap

(Bloomberg) — US equity futures wavered Wednesday, as Treasury yields held above the key 4% mark and investors fretted about the prospect of an antitrust crackdown on Google-owner Alphabet Inc.

Contracts on the S&P 500 slipped 0.1% and those on the Nasdaq 100 were 0.2% lower. Alphabet shares fell about 1% in premarket trading after the US Justice Department said it’s considering asking a federal judge to force Alphabet’s Google search engine to sell parts of its business. This would be the most significant move to rein in a major tech company since a failed bid to break up Microsoft Corp. two decades ago. 

While fears of crackdowns on Big Tech have been around for a while, the prospect of an actual breakup push is weighing on sentiment, said Kevin Thozet, a member of the investment committee at French asset manager Carmignac. However, he downplayed the eventual impact, because “at the end of the day, when we are looking at individual values of those separate business lines within Google, investors could be better off.” 

Other major premarket movers included Boeing Co, which shed 1.5% after negotiations to end an almost month-long workers’ strike collapsed and US-listed Chinese stocks, which extended losses as traders awaited more news on Beijing’s stimulus measures. In Europe, the Stoxx 600 index rose 0.3%.

Investors’ attention is now trained on the minutes from last month’s Fed meeting, due later on Wednesday, while US inflation data will be released Thursday. Ten-year Treasury borrowing costs stayed above 4%, holding near the highest levels since July 31, after diminished rate-cut expectations triggered a run of selling in previous days. Yields have risen more than 25 basis points this month.  

Carmignac’s Thozet is among those expecting the Fed to slow the rate-cutting pace after September’s 50 basis-point move, as “the probability of a recession on the one hand is falling and probability of no landing is increasing.”

Globally, however, rate-setters are turning more dovish. A European Central Bank rate cut next week is very probable, Governing Council member Francois Villeroy de Galhau said. New Zealand cut rates by half a percentage point, stepping up the pace of easing, while India’s central bank opened the door for its first cut in four years. 

In currency markets, Bloomberg’s dollar index rose for the eighth day, setting it on the best run of gains since 2022, as traders priced less US monetary easing. The New Zealand dollar fell to its lowest in seven weeks.

In other news, Brent crude futures eased below $77 a barrel, as US President Joe Biden and Israeli Prime Minister Benjamin Netanyahu were scheduled to speak as part of Washington’s efforts to temper Israel’s response to Iran’s missile attack. 

Geopolitics and China’s stimulus campaign are among the issues keeping investors on edge, equity sentiment is being broadly supported by the robust US economy, according to Emmanuel Cau, head of European equity strategy at Barclays Bank Plc.

“We try to focus on growth and inflation outlook and we still feel good about the soft landing narrative,” he said on Bloomberg TV.  

Key events this week:

• Fed minutes, Wednesday
• Fed’s Lorie Logan, Raphael Bostic, Austan Goolsbee and Mary Daly speak, Wednesday
• US CPI, initial jobless claims, Thursday
• Fed’s John Williams and Thomas Barkin speak, Thursday
• JPMorgan, Wells Fargo kick off earnings season for the big Wall Street banks, Friday
• US PPI, University of Michigan consumer sentiment, Friday
• Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman speak, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.3% as of 1:08 p.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures fell 0.1%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index fell 0.3%
• The MSCI Emerging Markets Index fell 0.6%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.2% to $1.0958
• The Japanese yen fell 0.3% to 148.71 per dollar
• The offshore yuan was little changed at 7.0706 per dollar
• The British pound fell 0.1% to $1.3086

Cryptocurrencies

• Bitcoin fell 0.5% to $62,053.56
• Ether fell 0.2% to $2,437.56

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.03%
• Germany’s 10-year yield was little changed at 2.24%
• Britain’s 10-year yield declined one basis point to 4.17%

Commodities

• Brent crude was little changed
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Zhu.

©2024 Bloomberg L.P.