As of now, the indicators suggest a positive opening for major U.S. indexes this Friday, extending the upward trend observed in the previous trading session. The market seems to remain upbeat due to hopes for favorable interest rate conditions, contributing to the Dow's continuous growth over a week.
Recently, certain signs of potential weakness in the U.S. labor market has raised investor expectations for the Federal Reserve to reduce interest rates in the coming months. While the Fed is projected to maintain current interest rates in June, the chances of a reduced rate by September are 85.4 percent as reflected by CME Group's FedWatch tool.
However, early trading may be limited as traders anticipate the release of preliminary data related to consumer sentiment for May from the University of Michigan. The forecasted fall in the consumer sentiment index to 76.0 in May from 77.2 in April could be noteworthy for traders, particularly those observing inflation expectations.
On Thursday, stocks experienced a general rise following the moderate performance of the preceding two days. The Dow sustained a seven-day uptrend, ending the day with it's highest closing value in over a month. The major averages concluded the day slightly lower than their respective session highs.
A report from the Labor Department indicating a larger than expected rise in the number of first-time claims for U.S. unemployment benefits during the week ending May 4th seemed to positively influence Wall Street. The report stated that initial jobless claims rose to 231,000, an increase of 22,000 from the preceding week's revised level of 209,000.
In company specific moves, shares of AppLovin soared after the mobile technology firm reported Q1 results that surpassed expectations. Similarly, glasses retailer Warby Parker witnessed a substantial upward move after reporting a trimmed Q1 loss and higher than estimated revenues. On the other hand, Airbnb shares suffered a significant fall after the company reported favorable Q1 results but provided discouraging guidance.
Telecom stocks experienced sharp increases leading to a 4.2 percent surge in the NYSE Arca North American Telecom Index. Gold stocks also posted strong gains, mirroring the rise in gold prices. Commercial real estate stocks moved considerably higher, causing the Dow Jones U.S. Real Estate Index to rise by 2.1 percent.
As for commodities and currencies, crude oil futures are up, and gold futures are experiencing a remarkable surge. Meanwhile, in currency markets, the U.S. dollar is trading higher against the yen and maintaining its position relative to the euro.
In Asian markets, stocks had a favorable Friday, while the dollar and bond yields dipped in response to new signs of deceleration in the U.S. labor market, which bolstered hopes for U.S. rate cuts this year. However, next week's vital U.S. inflation data, which could potentially steer the Fed's rate path, is prompting some traders to proceed with caution. Gold and oil prices are predicted to end the week with gains due to heightened international tensions in the southern Gaza city of Rafah.Chinese stocks closed relatively unchanged, buoyed by optimism over economic recovery and anticipated changes to Chinese tariffs by the Biden administration. Even though the increase was slight, the Shanghai Composite Index ended slightly higher at 3,154.55.
In Hong Kong, the Hang Seng Index witnessed a surge of 2.3 percent settling at 18,963.68, following reports that individual investors might be exempted from taxes on dividends earned via Stock Connect.
Japanese markets experienced small gains as investors welcomed positive earnings updates. The Nikkei 225 Index and the broader Topix Index appreciated by 0.4 percent to 38,229.11 and 0.5 percent to 2,728.21, respectively. The outperformers of the day were gaming stocks, with Konami Group, Bandai Namco Holdings, and Nintendo seeing rising by 9.3 percent, 5.6 percent, and 3.3 percent, respectively. Electrical equipment manufacturer Daikin Industries also enjoyed an 8.2 percent spike.
Meanwhile, positive expectations of U.S. rate cuts later this year boosted Seoul stocks, the Kospi, by 0.6 percent to 2,727.63.
Australia’s S&P ASX 200 Index and the broader All Ordinaries index also recorded modest gains, driven by strong performances by banks and energy stocks. Top performers included the big four banks and Woodside Energy Group, which rose by 1.9 percent.
In New Zealand, the benchmark S&P NZX-50 Index marginally increased, settling at 11,755.17, following promising signs of recovery in the manufacturing sector notified in April.
Turning to Europe, stocks saw advancements as a weakening U.S. labor market stimulated prospects of the Federal Reserve cutting interest rates in coming months. Significantly, investors were galvanized by the Bank of England’s dovish rate decision and the substantial growth in U.K. GDP.
The U.K. economy exited a technical recession in the first quarter due to a services output and household spending surge, causing the British pound to strengthen against other currencies. The U.K.'s FTSE 100 Index, French CAC 40 Index, and German DAX Index all recorded growth.
Performing particularly well was the building materials solutions provider CRH, along with Irish homebuilder Cairn Homes, which reported high demand for its energy-efficient homes.
In U.S. Economic reports, Federal Reserve Board Governor Michelle Bowman is expected to address "Financial Stability Risks: Resiliency and the Role of Regulators" in an upcoming convention.
Lastly, Novovax shares are expected to perform exceptionally well in pre-market trading after the biotech company secured a co-exclusive licensing agreement with Sanofi.The agreement terms encompass a mutually exclusive license for worldwide co-commercialization of Novavax's current standalone adjuvanted Covid-19 vaccine. Additionally, Novavax offers an exclusive license for its adjuvanted Covid-19 vaccine, specifically for use in combination with Sanofi's flu vaccines.
Solar energy firm, Array Technologies, is witnessing significant pre-market momentum, owing to an unexpectedly profitable first quarter, driven by higher-than-anticipated revenues.
In contrast, Akamai Technologies' shares are expected to face downward pressure following the cloud company's disheartening guidance for the second quarter.
