Investors wait for clarity on inflation and growth
U.S. equity futures softened ahead of Friday’s opening bell as traders shifted their focus from weekly gains to a pivotal round of economic data. Contracts tied to the S&P 500, Dow Jones Industrial Average and Nasdaq each pointed modestly lower, reflecting caution rather than outright selling pressure.
The hesitation underscores how sensitive markets have become to macro signals. Fresh readings on consumer spending and inflation are due, including the Federal Reserve’s preferred price gauge. At the same time, the government will publish its first estimate of fourth quarter economic output, offering a snapshot of how strongly the economy closed out the year.
If inflation proves persistent, policymakers could decide to hold borrowing costs steady once again, prioritizing price stability over stimulus. Strong employment trends have already reduced the urgency for rate reductions. Likewise, a solid GDP print could temper calls for easing out of concern that cheaper credit might reignite price pressures.
Europe steadier, Asia mixed
Across the Atlantic, major European benchmarks traded higher by midday. Germany’s DAX and France’s CAC 40 advanced, while the United Kingdom’s FTSE 100 also posted gains, suggesting a more constructive tone compared with U.S. futures.
In Asia, performance was uneven. Japan’s Nikkei 225 declined as financial shares weakened amid anxiety about private credit exposure and potential business disruption tied to rapid advances in artificial intelligence. Prominent exporters, including major automakers and technology groups, also traded lower.
Hong Kong equities retreated as markets reopened after holiday closures, while mainland Chinese and Taiwanese exchanges remained shut. In contrast, South Korea’s Kospi surged to a record high, powered by defense contractors benefiting from increased global military spending. Australian shares finished marginally lower.
Energy cools, metals firm
Commodity markets reflected shifting risk perceptions. Oil prices edged lower after climbing to multi month highs on geopolitical tensions between the United States and Iran. Traders appeared reluctant to extend gains without further escalation.
Precious metals moved the opposite direction. Gold advanced modestly, reinforcing its traditional role as a defensive allocation in uncertain environments. Silver posted stronger gains, highlighting renewed appetite for industrial and inflation-sensitive assets.
Central bank calculus remains delicate
All attention now turns to how incoming data reshapes expectations for U.S. monetary policy. The Federal Reserve has signaled that additional rate adjustments hinge on clearer evidence that inflation is trending sustainably lower. For now, markets remain in wait-and-see mode, balancing signs of economic resilience against lingering inflation risks.
