U.S. equity futures nudged lower in early Thursday trading, with Treasury yields and the dollar also in the red, as global markets grow increasingly cautious over the impact of a dizzying array of policy announcements from President Donald Trump.
Stocks have been largely range-bound for much of the week, but closed modestly higher last night, with the S&P 500 at another all-time peak, despite a hawkish set of minutes from the Federal Reserve’s January policy meeting and mixed performance from the so-called Magnificent 7 megacap names.
The Fed minutes clarified the central bank’s message of patience following its decision to hold its benchmark borrowing rate steady at 4.375% last month, but also noted concern over the impact of new Trump policies on price pressures over the coming months.
“In particular, participants cited the possible effects of potential changes in trade and immigration policy, the potential for geopolitical developments to disrupt supply chains, or stronger-than-expected household spending,” the minutes read.
That message, as well as hints that the Fed could slow of pause the sale of Treasury bonds from its $6.8 trillion balance sheet, pushed benchmark yields and the dollar lower, with those moves extending into the overnight session.
Benchmark 10-year Treasury note yields were last marked at 4.525%, around 5 basis points south of Wednesday levels, while 2-year notes eased to 4.259%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.26% lower at 106.893.
“We believe the Fed will maintain a wait-and-see approach over the coming months and expect only two Fed rate cuts in 2025, in June and December,” said EY chief economist Gregory Daco. “The risk is tilted toward less easing if the administration’s policy mix fuels higher inflation and inflation expectations.”
On Wall Street, stocks are set for another muted open ahead of fourth quarter earnings from Walmart (WMT) and weekly jobless claims data prior to the start of trading.
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Futures contracts tied to the S&P 500 suggest a modest 9 point opening bell decline, with the Dow Jones Industrial Average called 60 points lower.
The tech-focused Nasdaq is priced for a 32 point slip, with Palantir (PLTR) , Intel (INTC) and Nvidia (NVDA) active in premarket trading.
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In overseas markets, reports that President Donald Trump is considering negotiating a trade deal with China may have added support for stocks in Europe, with the regional Stoxx 600 benchmark rising 0.31% in mid-day Frankfurt trading.
Those remarks had little impact on Asia stocks, however, with the regional MSCI ex-Japan benchmark falling 0.66% into the close of trading on renewed concerns over the impact of tariffs and the prospect of an escalating global trade war.
In Japan, the yen rose to a two-month high of 150.065 against the weakened U.S. dollar, a move that weighed on export stocks and pushed the Nikkei 225 1.24% lower by the close of trading.
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