A look at the day ahead in U.S. and global markets from Mike Dolan
Wall Street nursed a bruising on Walmart’s downbeat results, casting a cloud over the U.S. consumer just as more buoyant European markets awaited the weekend’s German election.
Another blizzard of often conflicting influences from geopolitics, trade, monetary policy and corporate earnings barrelled into world markets over the past 24 hours.
But it was the retailing giant’s miss on its sales and profit forecasts – citing the turbulent political environment and trade uncertainties ahead – that cut deepest.
Walmart’s stock recoiled 6.5%, denting a rise of over 80% to record highs over the past year and a strong outperformance since President Donald Trump’s election win.
Following last week’s disappointment on January U.S. retail sales, the miss dragged other retailers down in the slipstream and Amazon lost almost 2% too. The S&P500 ended off almost 0.5% and futures struggled to hold the line on Friday.
And adding some anxiety to the corporate fallout from radical U.S. government cuts, Palantir – which provides governments with services such as software that visualizes army positions – shed 5% after the Pentagon said it was looking at potential budget cuts for the fiscal year 2026.
Flash business surveys for February now top today’s macro diary, with AI chip behemoth Nvidia’s results due next week.
The Philadelphia Federal Reserve’s February surveys of its mid-Atlantic region also showed manufacturing activity readings tumbled this month by the most in nearly five years, and jobless claims ticked higher in the latest week.
Even as Fed officials continued to signal caution about easing policy any further amid persistent inflation uncertainties, Treasury yields fell back on the retail and business readouts.
Reining in debt yields further were comments from Treasury Secretary Scott Bessent, who said any move to increase the share of longer-term Treasuries in government debt issuance is “a long way off”. That’s despite his long-standing criticism of the previous Treasury boss Janet Yellen for front-loading debt in short-term maturities.
“We’re going to see what the market wants,” he said.
The retreat in yields and stocks dragged the dollar index back to its lowest level of the year – although the greenback found its feet again on Friday and clawed back some of those losses.
The dollar drop on Thursday was mostly concentrated against Japan’s yen, where speculation about another Bank of Japan interest rate rise as soon as next month has gone up a notch.
Japanese inflation released on Friday backed up that talk, as headline annual price rises hit 4% for the first time in two years last month. Former central bank board member Sayuri Shira said March would be a ‘good opportunity’ to lift rates again.
But, in a confusing twist, the yen retreated as Bank of Japan Governor Kazuo Ueda said on Friday the central bank stands ready to increase government bond buying if long-term interest rates rise sharply.
Ueda’s remarks helped push down the 10-year Japanese government bond yield to 1.42% from 1.455% earlier in the day, its highest since November 2009.
Whether Ueda’s comments reinforce speculation about rate rise preparations or flag concern about its impact is a matter of debate. But Japan’s Nikkei stock index ended higher.
In Europe, Germany’s election on Sunday is front of mind – with tension over Trump’s shocking turn of stance on Ukraine this week and still-looming tariff threats as a backdrop.
Hopes that a new German government will have enough backing to lift its self-imposed ‘debt brake’ after the election and up defense and investment spending are at stake – with the prospect largely behind European stocks outperformance this year.
Germany’s benchmark DAX index nudged higher on Friday and domestic-focused German mid caps were up 0.8%, having hit a seven-month-high early this week. Helping that was the release of business surveys showing activity in Germany’s private sector had picked up slightly in February.
The euro fell back slightly from near 3-week highs as the vote is awaited. One key to the results will be whether smaller parties clear a 5% threshold to enter parliament – critical to the math on whether a new coalition gets the two thirds majority to reform the debt clause in the constitution.
Elsewhere, sterling briefly hit a new high for the year against the dollar after a surprisingly upbeat retail sales report for January.
And Chinese shares rallied again, led by a buoyant tech sector on Hong Kong after Alibaba’s earnings beat late Thursday.
The Hang Seng ended 4% higher on the day.
Key developments that should provide more direction to U.S. markets later on Friday:
* US flash February business surveys from S&PGlobal, US January existing home sales, University of Michigan’s final Feb consumer survey
* Federal Reserve Vice Chair Philip Jefferson and San Francisco Fed President Mary Daly speak; European Central Bank chief economist Philip Lane speaks; Bank of Canada governor Tiff Macklem speaks
