U.S. Stocks May Show A Lack Of Direction In Early Trading

The major U.S. index futures are currently pointing to a roughly flat open on Friday, with stocks likely to show a lack of direction following the upward move seen over the course of the previous session.

Following the volatility seen over the past several sessions, traders may take a step back to assess the near-term outlook for the markets.

Traders may also be reluctant to make significant moves ahead of the unofficial start of earnings season next week.

Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), JPMorgan Chase (JPM), Wells Fargo (WFC), Johnson & Johnson (JNJ), UnitedHealth (UNH) and Netflix (NFLX) are among the companies due to report their quarterly results.

“Investors will be looking for confirmation that AI-related investment continues to translate into robust earnings growth and resilient margins, particularly among the large technology companies that have driven much of this year’s rally,” said Daniela Hathorn, Senior Market Analyst at Capital.com.

She added, “With valuations still elevated, earnings guidance could prove just as important as the headline results themselves.”

A lack of major U.S. economic data may also keep some traders on the sidelines ahead of the release of key inflation reports next week.

After seeing considerable volatility early in the session, stocks moved mostly higher over the course of the trading day on Thursday. The major averages all moved to the upside after Wednesday’s mixed performance, with the Nasdaq leading the charge.

The Nasdaq ended the day just off its high of the session, jumping 336.24 points or 1.3 percent to 26,206.89. The S&P 500 also advanced 60.93 points or 0.8 percent to 7,543.64, while the narrower Dow rose 139.02 points or 0.3 percent to 52,487.41.

As reflected by the surge by the tech-heavy Nasdaq, the strength on Wall Street largely reflected a rally by technology stocks.

Positive sentiment was generated in reaction to reports that the SK Hynix IPO was heavily oversubscribed, with the South Korean semiconductor company’s U.S.-listed shares expected to commence trading on Friday.

Micron Technology (MU) helped lead the sector higher, as the chipmaker spiked by 4.5 percent after announcing plans to invest up to $3 billion to strengthen the U.S. semiconductor supply-chain ecosystem.

A sharp pullback by the price of crude oil also generated buying interest, with U.S. crude oil futures tumbling by more than 2 percent after soaring over the two previous sessions.

Oil prices gave back ground despite the renewed exchange of attacks between the U.S. and Iran, as traders remain optimistic that a full-blown war can be avoided.

The pullback was partly attributed to President Donald Trump’s claim that Iran wants to “make a deal so badly,” although that is in line with his typical rhetoric.

Trump’s comment came after U.S. Central Command said forces attacked about 90 military targets in an effort to further degrade Iran’s ability to attack commercial shipping in the Strait of Hormuz.

“This is in retribution for yesterday’s bombing of ships by Iran. If it happens again, it will get much worse!” Trump said in a post on Truth Social.

Iran reportedly responded to the latest round of U.S. airstrikes with attacks targeting Bahrain, Kuwait and Qatar.

Computer hardware stocks turned in some of the market’s best performances on the day, with the NYSE Arca Computer Hardware Index surging by 3.6 percent.

Significant strength was also visible among gold stocks, as reflected by the 3.3 percent jump by the NYSE Arca Gold Bugs Index. The rally by gold stocks came amid a rebound by the price of the precious metal.

Networking, semiconductor and airline stocks also saw considerable strength, while energy stocks moved to the downside along with the price of crude oil.

Commodity, Currency Markets

Crude oil futures are inching up $0.07 to $72.15 a barrel after tumbling $1.44 to $72.08 a barrel on Thursday. Meanwhile, after surging $58.40 to $4,140.80 an ounce in the previous session, gold futures are falling $25.60 to $4,115.20 an ounce.

On the currency front, the U.S. dollar is trading at 161.85 yen versus the 162.37 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1426 compared to yesterday’s $1.1428.

Asia

Asian stocks rallied on Friday, with chip and AI firms leading the surge on the eve of SK Hynix’s U.S. market debut. Despite the U.S. and Iran exchanging fire, investors pinned hopes that the escalation of hostilities in the Middle East will be limited.

The U.S. dollar index was subdued in Asian trading, while gold was marginally lower at $4,110 an ounce after a U.S. official said the U.S. will continue “technical talks” with Iran and remains committed to finding a solution to the conflict.

Brent crude prices held below $76 a barrel but remained on track for a 6 percent weekly gain after the U.S. carried out strikes on 90 Iranian targets and Tehran retaliated by targeting American bases in Bahrain, Jordan and Kuwait.

China’s Shanghai Composite Index fell 1 percent to 3,996.16, while Hong Kong’s Hang Seng Index rose 0.6 percent to 24,175.12, driven by improvement in sentiment towards Chinese internet companies.

Japanese markets posted strong gains, supported by a rally in AI-related stocks. The Nikkei 225 Index jumped 1.2 percent to 68,557.73 as the yen remained rooted near 40-year lows and the government unveiled plans to encourage pension funds to increase investments in domestic financial assets.

The broader Topix Index settled 0.4 percent higher at 4,036.08. Among the top gainers, SoftBank Group, a key investor in OpenAI, soared 10.7 percent. Semiconductor equipment maker Advantest gained 2.3 percent and Tokyo Electron added 2.7 percent.

Seoul stocks rose sharply, recovering some of losses from earlier in the week ahead of SK Hynix’ debt on the Nasdaq in New York.

While SK Hynix shares ended slightly lower after a choppy ride, the Kospi Index surged 2.5 percent to 7,475.94 following a tech-led rally on Wall Street overnight.

Shipbuilder Hanwha Ocean jumped 3.4 percent after reportedly selling around $2 billion in the dollar-won forward market.

Australian markets ended modestly higher as gold and mining stocks rebounded from recent string of losses. The benchmark S&P/ASX 200 rose half a percent to 8,806, snapping a four-day losing streak as falling oil prices helped ease pressure on benchmark bond yields.

The broader All Ordinaries Index closed 0.5 percent higher at 9,003.70. Markets in New Zealand were closed for Mtariki Day.

Europe

European stocks are subdued on Friday, with AI valuation concerns and tit-for-tat strikes between Iran and the U.S. keeping investors on edge.

While the U.K.’s FTSE 100 Index is up by 0.1 percent, the French CAC 40 Index and the German DAX Index are both just above the unchanged line.

Euro zone government bond yields were steady following a violent sell-off in the previous session.

Careium AB shares have soared. The Swedish care technology company reported a 24 percent rise in second-quarter net sales from the same period last year.

Vodafone has also spiked after UAE telecoms operator E& announced it would sell its entire stake in the British carrier to Vega.

No-frills airline EasyJet has also skyrocketed after it has agreed in principle to a £5.7bn takeover proposal from U.S. private equity giant Apolo Global Management.

Recruitment specialist Hays has also surged after saying its annual operating profit would land at the top of analyst forecasts.

U.S. Economic News

No major U.S. economic data is scheduled to be released today.