U.S. Equity Futures Lags As Evergrande Bond Payment Relief Does Not Outweigh Disappointing Tech Profits

  • Futures on the Nasdaq and S&P fell on Friday as Snap and Intel’s results deteriorated sentiment.
  • Asian and European stocks rose after Chinese real estate giant Evergrande made a bond interest payment of $ 83.5 million on time.
  • “This should give temporary relief to fears of contagion in the Chinese financial system,” said one analyst.
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U.S. stock futures fell on Friday as disappointing tech earnings soured the mood, even as European and Asian stocks gained ground as Evergrande made an imminent interest payment on stocks. obligations.

The struggling Chinese real estate giant wired funds to make a bond interest payment of $ 83.5 million on Thursday, just before the deadline, according to reports from state-backed Chinese media and Reuters .

But Snap’s third-quarter profits dampened investor morale in the United States, after the instant messaging app provider said Apple’s privacy changes caused its digital advertising business to drop. .

Futures on the Dow Jones and S&P 500 were roughly flat, while those on the Nasdaq were down 0.3% at 6:15 am ET, suggesting a mixed open later on Friday.

Shares of Snap, which released results after the market closed, fell 21% in pre-market trading. Other stocks with digital advertising companies also lost ground, with Facebook and Twitter down about 4% before market. Alphabet and Pinterest, parent of Google, fell 2% and 3% respectively.

Chipmaker Intel added to the gloom in tech stocks, whose shares fell 9% after a weak quarter that missed analysts’ earnings estimates. Investors have benefited from a mostly positive third quarter earnings season this week, with most companies delivering revenues above targets.

Official US data on Thursday showed initial jobless claims fell to another pandemic-era low last week, hitting 290,000 from an expected 300,000. This and updates on existing home sales and trade terms
were seen as a trade stimulus on a decline in the Federal Reserve.

The Fed is expected to reveal its plans to start cutting asset purchases in November. He said last month that if economic progress continues, a “moderation in the pace of asset purchases may soon be warranted.”

In Asia, investors greeted with relief Evergrande’s surprise interest payment, as its 30-day grace period was due to expire on Saturday. However, the real estate company still faces several other offshore bond payment obligations.

“This should give temporary respite from fears of contagion in the Chinese financial system, although I note that Evergrande has another grace period payment due on Oct. 29 of $ 45.17 million,” said Jeffrey Halley, analyst. senior market at Oanda, in a note. .

“Still, if they’ve been successful in raising the funds for this one, it’s safe to assume that next week’s will be met as well.”

The Hong Kong Hang Seng rose 0.4%, the Tokyo Nikkei 0.3%, while the Shanghai Composite lost 0.3%.

European stocks opened higher, following gains in Asia.

The Euro Stoxx 600 gained 0.5%. London’s FTSE 100 rose 0.4% and Frankfurt DAX rose 0.5%.

Oil prices fell slightly, after a report from the National Oceanic and Atmospheric Administration that the winter in the United States is expected to be warmer than the average weighed on the market. Still, Brent crude and West Texas Intermediate were trading near multi-year highs at $ 84.76 and $ 82.67 per barrel, respectively.

Data released for the day includes the Flash Purchasing Managers Index for worldwide and UK retail sales for September. Honeywell and American Express are expected to release their third quarter results.

Read more: UBS Shares 4 Forex Trades To Take Advantage Of Differences In When Central Banks Inevitably ‘Take Off’ Interest Rates As Investors Obsessed With Timing

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Elaine R. Knight