Global Markets Inch Lower After Thursday's Rally
By Dow Jones Newswires StaffStock markets were taking a breath early on Friday at the end of a week when Wall Street hit fresh records, with even the mid-and-small cap Russell 2000 hitting a new high in the previous session. The rally has been fuelled by the Federal Reserve's interest-rate cut and signals that it plans to cut further before year end, and an AI-driven tech rally. U.S. stock futures edged lower, there were small gains for European bourses at the open while Asian indexes closed down.The U.S. data calendar is thin; Mary Daly, president of the Federal Reserve Bank of San Francisco delivers a speech later, while "The Fed's 'blackout' period is now at an end, meaning we'll receive not only remarks from 2027 voter Daly this evening, but should also at some stage get a statement from Gov. Miran explaining his dissent [at Wednesday's Fed rate decision]," said Pepperstone's Michael Brown in a note.U.S. futures for the S&P 500, Dow Jones Industrial Average and Nasdaq were all down around 0.1% early in Europe, having all closed at record highs Thursday.Asian indexes closed down. Japan's Nikkei gave up its early morning gains after the Bank of Japan said it would start gradually selling its holdings of domestic equity exchange-traded funds and real estate investment trusts. The Tokyo Stock Exchange REIT Index dropped 0.3%. Japanese government bonds extended their declines after two BOJ members dissented from the Board's decision to leave monetary policy unchanged, voting for an increase. Hong Kong's Hang Seng fell 0.2% while South Korea's Kospi closed down 0.5%.In Europe, the pan-European Stoxx Europe 600 fell 0.1% in morning trading while the U.K.'s FTSE 100 was flat.Sterling fell to a six-week low against the euro and a one-week low versus the dollar after data showed the U.K. government borrowed more than expected in August while yields on U.K. government bonds rose. "This is going to lead to calls about the sustainability of public finances, and the need for tax rises at the upcoming Budget," XTB's Kathleen Brooks says in a note. The 10-year gilt yields climbed 4 basis points earlier to a two-week high of 4.711%.Net borrowing came in at 18 billion pounds in August, well above the 12.5 billion pounds expected by the budget watchdog.The U.S. dollar edged higher after stronger U.S. data eased fears about a weak economic outlook, particularly in the labor market, Deutsche Bank analysts noted. Initial jobless claims fell 33,000 to 231,000 last week, below the 240,000 expected by economists in a WSJ survey. The Philadelphia Fed's manufacturing activity index jumped to 23.2 in September, above the 2.0 forecast. "All round, that helped to lift the mood on the U.S. outlook, particularly after several prints in early September had come in on the downside," the analysts said. The DXY dollar index against a basket of major currencies gained 0.1% after falling to a three-and-a-half year low on Wednesday just after the Fed rate cut.U.S. Treasury yields were up late in Asia, adding to a rise in global yields on Thursday. The 10-year Treasury yield rose 3.1 basis points to 4.134% and the 30-year Treasury yield rose 3.8 basis points to 4.757%, according to Tradeweb.Gold prices edged up after settling lower in the previous session, weighed down by a stronger U.S. dollar and cautious optimism surrounding the Fed's policy outlook. Gold futures were 0.2% higher at $3,685.20 a troy ounce. That pulled up mining-sector stocks with London-listed Endeavour Mining and Fresnillo leading FTSE 100 risers, up 3.0% and 2.5%, respectively. Oil benchmarks eased but were on track for a small weekly gain.Write to Barcelona Editors at [email protected]