US stock futures edged higher on Friday after the major averages posted their biggest one-day rallies in over two years, as softer-than-expected inflation data raised hopes that the Federal Reserve would slow the pace of interest rate hikes in upcoming meetings. Futures contracts tied to the three major indexes were all up at least 0.1%. In regular trading on Thursday, the Dow gained 3.7%, the S&P 500 jumped 5.54% and the Nasdaq Composite soared 7.35%, with all three benchmarks on track for a winning week. Those moves came as data showed that annual inflation eased to 7.7% in October, slowing for the fourth straight month and coming in below expectations of 8%. Core readings also surprised to the downside, leading markets to bet on a lower terminal rate that pressured the dollar and Treasury yields, while pushing technology and other growth stocks higher.
European equity markets were headed for a higher open on Friday.Investors cheered news that China eased some Covid rules involving travelers and dialed back its stringent contract tracing measures. DAX and Stoxx 600 futures were up about 0.7% in early trade.
UK stocks were set to open higher on Friday as investors reacted to a raft of economic data, headlined by figures showing Britain’s economy contracted 0.2% QoQ in the third quarter, which could potentially be the beginning of the country’s longest recession since records began that is expected to last until the first half of 2024. UK stocks also tracked global peers higher after cooler-than-expected US CPI numbers raised hopes for peak inflation and a slower pace of interest rate hikes from the Federal Reserve. Moreover, investors cheered news that China eased some Covid rules involving travelers and dialed back its stringent contract tracing measures. FTSE 100 futures rose 0.8% in early trade.
The CAC 40 index reversed early losses to close 2% higher at 6,557 on Thursday after the US October inflation print surprised to the downside and eased expectations on the Federal Reserve’s terminal rate. Consequently, monetary policy-sensitive sectors led the gains, with STMicroelectronics, Dassault Systemes, and Worldline shares all surging more than 7%. The heavyweight luxury brands in Paris also closed sharply higher, led by a 4.4% jump for LVMH. On the other hand, Teleperformance collapsed 34%, hit by reports that Colombia’s Ministry of Labor has launched an investigation into the French subcontractor of the social network TikTok over allegations of violation of trade union rights, traumatic working conditions, and low wages. Also, Credit Agricole lost 2.5% as the performance of the corporate and investment bank unit came in just below analyst estimates.
The FTSE MIB index pared early losses to close 2.6% higher at a five-month high of 24,400 on Thursday, booking gains for the fifth straight session and tracking the upswing in world equities after the US CPI print was well below expectations. Policy-sensitive tech shares soared more than 7% in Milan, led by a 9% jump for Nexi and an 8% gain for STMicroelectronics. In the meantime, Telecom Italia added 5% after reporting lower profit losses than expected and signaling a positive outlook. On the political front, the Italian government is reportedly set to approve a EUR 9 billion package to raise energy output and preserve stocks ahead of the winter.