U.S. futures, Japan’s stimulus, bitcoin weakness - what’s moving markets

Investing.com - U.S. stock futures stabilized Friday after the week’s sharp losses, while bitcoin has slumped to a seven-month low. Attention is also on the Japanese stimulus package. as well as economic weakness in the U.K. ahead of next week’s budget.

1. U.S. futures steady after sharp losses 

U.S. stock futures steadied Friday, stabilizing after the previous session’s sharp losses as investors grew more wary about the likelihood of an interest rate cut by the Federal Reserve next month. 

At 03:00 ET (08:00 GMT), the S&P 500 futures traded 4 points, or 0.1%, lower and Nasdaq 100 futures dropped 45 points, or 0.2%, while Dow futures rose 35 points, or 0.1%.

All three major U.S. stock indexes slumped Thursday, and are on track for a losing week, with the S&P 500 down 2.9% week to date, the Dow Jones Industrial Average almost 3% lower while the NASDAQ Composite has shed 3.6%.

The release of stronger-than-expected job growth for September, with the delayed jobs report, hit sentiment as traders further priced out the likelihood of a quarter-point rate cut next month. 

This overturned the earlier confidence generated by strong third-quarter results and upbeat guidance from Nvidia (NASDAQ:NVDA), the most valuable company in the world and the poster child for the massive growth generated by artificial intelligence spending. 

There are more economic data to digest Friday, in the form of the November manufacturing and services PMI releases, industrial production and housing starts, as well as the closely-followed Michigan consumer sentiment number.

In the corporate sector, Gap (NYSE:GAP) will be in the spotlight after the clothing retailer beat expectations for third-quarter comparable sales, helped by strong marketing-driven demand for its Old Navy and Banana Republic brand apparel even amid economic uncertainty.

2. Japan approves stimulus package; yen intervention risks rise

Japan’s parliament on Friday approved a ¥21.3 trillion ($135 billion) stimulus package, with new Prime Minister Sanae Takaichi seeking to sustaining the country’s recent recovery while boosting competitiveness in sectors such as semiconductors, artificial intelligence and shipbuilding.

The package includes ¥17.7 trillion in general spending and ¥2.7 trillion in temporary tax cuts, with the remainder directed toward subsidies and targeted programs.

The yen gained slightly Friday, but is still on track to lose around 1.7% this week against the U.S. dollar after hitting a 10-month low.

Japanese Finance Minister Satsuki Katayama said Friday that intervention was a possibility to deal with excessively volatile and speculative moves, leaving traders on alert for signs of official buying.

Tokyo last spent ¥5.53 trillion, or nearly $37 billion, in July 2024 to intervene in the foreign exchange market to haul the yen away from 38-year lows.

3. Bitcoin falls to seven-month low 

Bitcoin suffered from the broad flight from risk assets Friday, with the world’s largest cryptocurrency ending the week sharply lower as worries over lofty tech valuations returned and bets on near-term Federal Reserve policy easing faded.

Bitcoin fell over 6%, breaking below $86,000 to hit a seven-month trough of $85,350, and was facing a weekly loss of over 9%.

Risk sentiment, one of the central drivers of the digital token, has been dented by the broader market wariness surrounding the trajectory of the AI industry, even in the wake of blowout earnings from tech giant Nvidia. 

Market participants have also highlighted the uncertainty surrounding the Fed’s December rate decision, with payrolls growing by more than expected in the delayed September jobs report.

About $1.2 trillion has been wiped off the total market value of all cryptocurrencies in the past six weeks, according to market tracker CoinGecko.

4. Reeves faces difficult budget decisions 

Economic data released earlier Friday amply illustrated the difficulties British finance minister Rachel Reeves faces ahead of her annual budget next week.

Britain’s government borrowed a higher-than-expected £17.4 billion pounds ($22.78 billion) in October, official data showed, ahead of the £15.0 billion pounds forecast.

Chancellor Reeves is expected to need to raise £20-30 billion ($26-39 billion) through higher taxes due to an expected growth downgrade from the government’s budget watchdog as well as higher borrowing costs and an inability to pass planned welfare cuts through parliament.

However, tax rises will put further strain on the tax-paying public, who are already showing signs of stress.

The country’s retail sales fell by a more than expected 1.1% in October, data showed earlier Friday, while Britain’s longest-running consumer survey, from GfK, fell in November.

5. Crude set to post weekly losses 

Oil prices fell Friday, adding to recent losses as traders digested a potential Russia-Ukraine peace deal that could swell global market supply.

Brent futures dropped 1.7% to $62.30 a barrel, and U.S. West Texas Intermediate crude futures fell 2% to $57.85 a barrel.

Both contracts are on track to post weekly losses of over 3%, erasing most of last week’s gains.

Market sentiment turned bearish as Washington pushed for a peace plan between Ukraine and Russia to end the three-year war, while sanctions on top Russian oil producers Rosneft and Lukoil are set to take effect later in the session.

Ukrainian President Volodymyr Zelenskiy said he has received a 28-point peace plan jointly drafted by the U.S. and Russia, and he expects to speak with U.S. President Donald Trump in the coming days.

If Ukraine was to agree to the deal, it would remove much of the war’s geopolitical risk premium baked into crude.

(Reuters contributed reporting.)