US stock futures pointed to a rebound on Friday after Wall Street suffered a sharp selloff in the previous session. S&P 500, Nasdaq 100 and Dow Jones futures were trading higher, as investors looked to recover some of Thursday's losses.
At around 6:01-6:02 a.m. EDT, S&P 500 futures were up 29 points, or 0.38%, at 7,691.50. Nasdaq 100 futures gained 206 points, or 0.70%, to 29,506.50, while Dow Jones futures rose 191 points, or 0.36%, to 53,040. The data is delayed.
Three factors are supporting the early improvement in sentiment: easing US Treasury yields, a retreat in oil prices after an early rise towards $95 a barrel, and US labour-market data that came in stronger than expected.
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Treasury Yields
US Treasury yields had resumed their climb on Thursday, particularly at the long end of the curve, putting pressure on equities. Concerns over inflation, higher oil prices and the supply of US government debt added to the pressure in the bond market.
Government efforts to calm the Treasury selloff failed to fully ease concerns over inflation and Treasury supply. The rise in yields contributed to Thursday's weakness across Wall Street.
During Thursday's session, the S&P 500 and Nasdaq Composite fell 0.9% and 1%, respectively. The S&P 500 is now down 1.9% for the week, while the Nasdaq has fallen 2.5%. Both indexes are on course to snap three-week winning streaks. The Dow is down 1.8% week to date and is heading for a second consecutive weekly decline.
Oil Prices
Oil prices are another factor supporting the early recovery. Crude had risen towards $95 a barrel in the early hours of Friday, adding to concerns over inflation and interest rates.
Oil has since retreated to around $92 a barrel, providing some relief to markets. Still, higher oil prices remain a concern for investors because they can add to inflationary pressure and influence expectations around the Federal Reserve's interest-rate path.
US Labour Market
The third support for equities came from stronger-than-expected US labour-market data. Initial jobless claims stood at 206,000 for the week ended August 14, below the 210,000 expected by markets. The reading points to continued resilience in the labour market and could reduce pressure on the Federal Reserve to cut rates at its September meeting.
VT Markets said stronger labour-market data could keep interest rates elevated and push the 10-year Treasury yield towards the 4.2% level seen earlier this year, from around 3.9%.
The firm also expects easing recession concerns to support equities and sees scope for the US dollar to strengthen as investors seek higher yields.
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Outside the US, European markets opened mixed on Friday. The pan-European Stoxx 600 was just above the flatline, while the FTSE 100 gained 0.14%. Germany's DAX and France's CAC 40 were marginally lower.
Asian markets also ended mixed. Japan's Nikkei 225 fell 0.30%, South Korea's Kospi rose 0.88%, Australia's S&P/ASX 200 declined 0.27%, while China's CSI 300 gained 0.57%.
The MSCI All Country World Index is on track for a weekly decline of 1.5%, its biggest drop in five weeks. For Wall Street, investors remain focused on Treasury yields, oil prices, inflation and the outlook for US interest rates as trading gets underway
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