U.S. equity futures moved higher Friday, with news of a Johnson & Johnson (JNJ) – Get Johnson & Johnson (JNJ) Report consumer healthcare spin-off powering the Dow, as investors eye bond market reaction to Wednesday’s inflation shock and its impact on broader market sentiment.
U.S. Treasury bond yields were largely tame in the overnight session, with full trading in New York set to resume following yesterday’s Veterans’ Day observance. Reaction to Wednesday’s inflation release — which showed U.S. consumer prices rising at the fastest pace since 1990 — could be key for market direction heading into the final weeks of the 2021 trading year.
The CME Group’s FedWatch tool is now pricing in a 68.8% chance of a rate hike by June of next year, notably earlier than prior forecasts, while benchmark 2-year Treasury note yields are trading at 0.536%, more than double the Fed’s target range of between 0% and 0.25%.
The consumer impact of inflation will also be in evidence with data from the University of Michigan’s key sentiment index, which is due at 10:00 am Eastern time.
Futures contracts tied to the Dow Jones Industrial Average are indicating a 110 point opening bell gain after Johnson & Johnson unveiled plans to split the healthcare and pharmaceutical giant into two separate companies.
Shares in the Dow component were up 4% in pre-market trading — adding around 45 points to the 30-stock average — after it said it would spin-off its consumer health unit from its pharmaceutical and medical devices division
Contracts tied to the S&P 500 are priced for a 9.5 point move to the upside while those linked to the tech-focused Nasdaq Composite are indicating a 38 point advance even as benchmark 10-year Treasury note yields edge higher, to 1.573%, in quiet overnight trading.
Biogen (BIIB) – Get Biogen Inc. Report shares were another notable pre-market mover, rising 3.2% after the drugmaker released a new batch of positive data linked to its recently-approved Alzheimer’s treatment.
Alibaba Group Holding’s (BABA) – Get Alibaba Group Holding Ltd. Sponsored ADR Report U.S.-listed shares edged 0.9% lower after the online retail giant posted its slowest ‘Single’s Day’ sales growth on record.
Sales for the elven-day festival, the largest online shopping event in the world, rose just 8.5% from last year, Alibaba said, as marketing — and to a large extend, hype — evaporated amid Beijing’s broader crackdown on corporate profitability in the tech sector.
Another China-based U.S. listing, Xpeng (XPEV) – Get Xpeng Report, rose 4.15% after the electric-vehicle maker indicated it is set to reveal a new sport utility vehicle next week.
Staying with electrified vehicles, Tesla (TSLA) – Get Tesla Inc Report CEO Elon Musk disclosed the sale of an additional 639,737 shares of the electric-car maker, worth approximately $640 million, just days after offloading about $5 billion worth of stock following a poll of his followers on Twitter.
Away from equities, the dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.05% lower on the session at 94.156, near to the highest levels since July of last year following Wednesday’s hotter-than-expected October inflation reading.
In overseas markets, Europe’s Stoxx 600 edged 0.11% higher by mid-day trading in Frankfurt while solid gains in South Korea and Hong Kong lifted the region-wide MSCI ex-Japan index to a 0.65% gain for the session.
In Tokyo, reports of a 40 trillion yen stimulus package from the new government of Prime Minister Fumio Kishida lifted the Nikkei 225 by 1.13% to close at 29,609.97 points.