Pre-market: Nasdaq futures down 0.4%, FedEx surges over 10%

Due to market sentiment remaining highly sensitive to any signs of escalation in the Middle East war, U.S. stock index futures dipped slightly on Friday, while Brent crude oil resumed its rise, and bonds also retraced earlier gains.

As of press time, Dow futures were down 0.3%, S&P 500 futures were down 0.3%, and Nasdaq futures were down 0.4%.

In Europe, the Stoxx 600 index rebounded 0.5% after a significant drop on Thursday, but it is still likely to record a third consecutive week of declines. The ongoing conflict in the Middle East and soaring oil prices have heightened market concerns about inflation and increased the likelihood of interest rate hikes by the European Central Bank.

Among them, the heavily weighted financial sector became a major driving force; while the energy sector fell 0.7% due to a drop in oil prices. The benchmark index has declined 1.1% so far this week. If it closes lower for three consecutive weeks, it will mark the longest weekly decline since April 2025.

U.S. stock index futures mostly slipped slightly, with S&P 500 futures down 0.3%, indicating that the benchmark index may record its longest consecutive weekly decline since March 2025.

FedEx shares surged over 10% in pre-market trading after releasing its earnings report on Thursday and raising its full-year outlook. AMD, on the other hand, plummeted nearly 20% in pre-market trading after a U.S. Department of Justice indictment accused two of its employees and a contractor of illegally selling AI servers worth billions of dollars.

Asian stock markets showed mixed performance on Friday, remaining relatively stable overall. The South Korean composite index rose 0.3%, while the Hong Kong Hang Seng index fell 1.2%. The Japanese stock market was closed for a holiday.

Iran Launches New Round of Retaliatory Missile Attacks

Regarding the latest developments in the Middle East, Iran continues to launch attacks on neighboring countries, despite Israel stating it will avoid hitting Iran’s energy infrastructure. Just a day prior, U.S. President Trump had urged Israel not to strike Iran’s gas infrastructure again.

Israel stated that it has attacked Iranian infrastructure in multiple locations, including the capital Tehran; meanwhile, Iran has launched a new round of retaliatory missile attacks.

Anna Wu, cross-asset strategist at Van Eck Associates Corp., stated, “The U.S., Israel, and some other countries are trying to manage risks, as the impact of war through energy channels is expanding. The narrative coming from the U.S. seems slightly more hopeful, but market consensus is changing almost daily.”

Brent crude rose 1.1%, remaining around $107 per barrel, approaching $110 per barrel, with Thursday’s closing price having reached its highest level since July 2022. Qatar reported that the Ras Laffan liquefied natural gas facility was damaged, resulting in a loss of 17% of the country’s export capacity, with repairs expected to take three to five years. Meanwhile, as attacks on Middle Eastern energy infrastructure continue, a Kuwaiti refinery was also hit in a drone attack.

European gas prices are expected to rise about 20% this week. Analysts at ING stated, “The market is beginning to factor in the possibility of longer-term supply disruptions.” The Dutch TTF near-month contract fell 2.3% in morning trading to €60.41 per megawatt-hour, but had previously reached its highest level since 2022 on Thursday.

Central Bank Warnings Prompt Traders to Increase Tightening Bets

As this conflict disrupts energy supply chains and drives gasoline and jet fuel prices skyrocketing, traders are carefully interpreting every piece of geopolitical news. Central banks worldwide have issued warnings about inflation risks, prompting traders to increase bets on further tightening of monetary policy.

David Kruk, trading head at La Financiere de l’Echiquier in Paris, stated, “Investor sentiment has clearly shifted to a more bearish position. However, the market has also reached a level where if a path to end the conflict can be found, a strong rebound is possible.”

U.S. Treasury yields rose across the board, with the two-year Treasury yield up 6 basis points to 3.85%. The 10-year Treasury yield fell 0.6 basis points to 4.275%, while the 30-year Treasury yield remained stable at 4.856%. Michael Brown, an analyst at Pepperstone, stated that the market’s focus will continue to be on geopolitical developments, “and as the weekend approaches, there is a high likelihood that market participants will again reduce their risk exposure.”

British bonds remain under pressure after the Bank of England signaled readiness to raise interest rates, pushing the two-year British bond yield to a 14-month high on Thursday. On Friday, longer-term bonds experienced greater volatility, with the 10-year British bond yield rising 4 basis points to 4.88%.

Dollar Reverses Some Losses

The dollar rose slightly, reversing some of the previous day’s losses. The dollar index increased by 0.1% to 99.341, having fallen to 98.975 on Thursday, a low for eight days. Volkmar Baur, an analyst at Deutsche Bank, stated that due to uncertainty in oil price outlook, “as long as the conflict persists and new developments occur daily, the forex market must be prepared for continued fluctuations in exchange rates.”

The European Central Bank maintained its policy rate on Thursday, but policymakers are expected to discuss interest rate hikes in the coming months as the Iranian war is pushing up inflation in the eurozone.

Bitcoin rose 1.1% to $71,250, having dropped to $68,802 on Thursday. Analysts at Saxo Bank noted that the previous decline in this cryptocurrency reflected the cautious tone released by the Fed in response to uncertainties surrounding the Middle East conflict and high energy prices. They stated, “For investors, the key is that cryptocurrencies are once again behaving like an asset highly sensitive to the macro environment, driven by interest rate expectations, dollar strength, and geopolitical developments, rather than solely by factors intrinsic to cryptocurrencies.”

Gold edged higher but is expected to decline more than 7% this week, heading toward its worst weekly performance since the pandemic began. This is mainly due to the strengthening dollar and weakened rate expectations.

Market observers noted that investor demand has weakened, and ongoing ETF outflows continue to pressure gold. Analysts at ING stated, “Upside momentum has diminished. Some investors are selling gold to raise cash or to rebalance their portfolios.”

Bank of America: $69.5 Billion Outflow from U.S. Stocks in February

Bank of America’s latest report states that investors decisively turned to stocks outside the U.S. in February, marking a significant shift in regional allocation.

Bank of America’s latest report states that investors decisively turned to stocks outside the U.S. in February, marking a significant shift in regional allocation. Among them, both active and passive funds saw the highest inflows into emerging market stocks, exceeding $17.6 billion; followed by the Asia-Pacific region, with inflows exceeding $14.9 billion.

In contrast, U.S. stocks recorded the largest outflow, with funds selling off $69.5 billion worth of stocks.

By sector, the strongest buying power was in the consumer staples sector, exceeding $7.9 billion, followed by the materials sector with inflows of over $5 billion, while the software and media sectors faced significant sell-offs of $17.7 billion and $11 billion, respectively.

The report indicates that last month’s largest long position stock purchases included Walmart, AbbVie, Roche, and ASML, while major sell-offs included AstraZeneca, Microsoft, Apple, and NVIDIA.

Bank of America stated that the most widely held stock among long position funds globally is still TSMC, with a holding ratio of 92%, followed by ARM, Microsoft, NVIDIA, and Tencent. Stocks that continue to outperform the market, combining high holdings and positive momentum, include Broadcom, TSMC, Samsung Electronics, Micron Technology, SK Hynix, and Eli Lilly.

Focus Stocks

The optical communication sector continued to rise in pre-market trading, with Lumentum and Coherent both rising over 1%. The recent OFC conference sent a strong signal: the explosive growth in AI computing power is forcing data centers to completely restructure their optoelectronic network architecture.

FedEx surged over 10% in pre-market trading, with Q3 results exceeding expectations and raising full-year profit guidance.

AMD plummeted over 19% in pre-market trading due to illegal smuggling of AI servers, with its co-founder arrested.

Firefly Aerospace rose over 8% in pre-market trading, with Q4 revenue surging and losses narrowing.

Planet Labs surged over 16% in pre-market trading, with quarterly results and guidance exceeding expectations.

XPeng fell over 3% in pre-market trading, with earnings report imminent, and CICC has lowered its earnings forecast.

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Editor: Guo Mingyu