Lower Open Likely For US Markets, Oil Steady

Lower open likely for the U.S. markets Friday after key equity-index futures looked down in the morning.

Futures on Dow Jones, S&P 500 and Nasdaq indicated a lower U.S. open. This contrasts Thursday gains boosted by better U.S. economic data on housing starts and a pickup in the Philadelphia Federal Reserve’s manufacturing survey.

The earnings season is winding down with 457 of S&P 500 companies having reported results. In that, 75 percent has surpassed profit expectations according to the Refinitiv data.

Oil steady

Meanwhile, oil prices were steady on Friday after losing some earlier gains. But rising tensions in the Middle East caused fears of supply disruptions and they can be a trigger for price escalation

Brent crude futures at $72.61 a barrel at 0658 GMT was down just one cent. Brent was 2.9 percent high for the week and was on track for the first gain in three weeks.

The U.S. West Texas Intermediate (WTI) crude futures added 8 cents to hit $63.95 per barrel. The upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) and other producers will decide whether to continue with supply cuts that propped up prices more than 30 percent so far.

The decision may be a game-changer in oil prices for months ahead.

A Saudi-led military coalition carried out air strikes on the Houthi-held capital Sanaa on Thursday after the Iran-aligned movement owned responsibility for the drone attacks on Saudi oil pumping stations.

Asian stocks down

Chinese stocks fell on Friday. Shanghai Composite was down 2.5 percent amid the U.S move to block China’s Huawei Technologies from business with American companies. Stocks tumbled in Hong Kong and South Korea.

In terms of the direction of the trade conflict, “the next fortnight will be very, very important,” said UniCredit strategist Kiran Kowshik.

“Chinese counter-tariffs are due on June 1 and if those get effective, I think markets will price in the risk of the U.S. imposing its additional $300 billion of tariffs ahead of the G20 meeting near the end of June,” he added.

But Japan’s Nikkei 225 rallied 0.9 percent and the Australian index ASX 200 also soared. In Europe, markets slipped 0.6 percent in the morning trade. The pan continent index Stoxx Europe 600 Index fell.

Gold prices firm

Gold prices were steady on Friday, after the previous sessions' biggest one-day percentage loss in a month.

A stronger dollar increased investor appetite for riskier assets like equities due to strong U.S. data and corporate results bolstered the stocks.

Spot gold was unchanged at $1,286.27 per ounce as of 0732 GMT while U.S. gold futures remained steady at $1,286.90 an ounce. Spot gold had crashed 0.8 percent on Thursday as a biggest one-day decline.

Benjamin Lu, an analyst with Singapore-based Phillip Futures said strong corporate earnings boosted equities and exerted pressure on gold.