Futures fall with Europe stocks; Apple advances

Bloomberg

US futures fall with European stocks as concern about tighter policy lingered at the end of a volatile week, overshadowing strong earnings from Apple Inc.
Futures on the S&P 500 extended a drop, while those on the Nasdaq 100 gave up gains of as much as 1.4%. Apple rises in premarket trading. Losses in tech and auto shares dragged on European benchmarks, outweighing robust results from luxury firm LVMH SE and retailer Hennes & Mauritz AB.
A dollar gauge ticked up, while Treasuries slipped. A gauge of Asia-Pacific shares rose for the first day in six as gains in Japan offset declines in China.
Global markets have been whiplashed this week by volatility as the Federal Reserve signalled aggressive tightening, while geopolitical tensions and an uneven earnings season added to investor concerns. Also sapping sentiment, Germany’s economy shrank more than expected.
As investors brace for rising rates, rotating out of frothier equities, value stocks are outperforming.
Money markets are now pricing in nearly five Fed hikes this year after a hawkish stance from Chair Jerome Powell. That’s up from three expected as recently as December.
“Tighter liquidity and weaker growth mean higher volatility,” Barclays Plc strategists led by Emmanuel Cau wrote in a note. The “current growth scare looks like a classic mid-cycle phase to us, while a lot of hawkishness is priced in.”
The US stock market is priced “quite aggressively” versus other developed nations as well as emerging markets, and valuations in the latter can be a tailwind rather than a headwind as in the US, Feifei Li, partner and CIO of equity strategies at Research Affiliates, said on Bloomberg Television.
Elsewhere, oil headed for a sixth weekly advance and gold nursed losses. Bitcoin held above $36,000.

China’s $1.2 trillion stock selloff triggers media, fund support
Chinese stocks extended their nearly $1.2 trillion rout this month even as mutual funds, state media and companies all intensified efforts to support the market.
At least 15 mutual funds have committed to buying their own equity-focused products in the past couple of days, a move that may have been coordinated. A series of recent articles in state media have touted the attractiveness of Chinese stocks on valuation and policy support, with the Securities Times calling the act of the funds “setting a good example.”
China’s CSI 300 Index fluctuated between losses and gains on Friday, but ended 1.2% lower as traders weighed the impact of the concerted efforts, while also seeking to close positions ahead of a week-long Lunar New Year break. Trading volumes were about 10% below the 30-day average, according to Bloomberg-compiled data. The gauge slipped into a bear market.
A growing number of strategists have turned overweight on the nation’s equities this year, citing monetary easing and fewer regulatory concerns. Still, worries over China’s growth and the property market distress are casting doubts over a swift turnaround.
Mutual fund pledges — which were also made during the rout seen early last year and the one at the start of the pandemic selloff in 2020 — have typically helped boost the market. The promised buying this time amounts to at least $157 million.
Still, foreigners continued to offload China’s onshore shares for a second day, selling some 12.5 billion yuan worth of stock. Friday’s decline took losses this year to more than 7.6%, which were also part of a broader, global selloff. Some 72% of companies traded on the CSI 300 are now below the 200-day moving average, the most since April 2020.