MARKET WRAPS

Watch For:

U.K. GDP, trade, industrial production; no major corporate trading updates expected

Opening Call:

European stock futures traded lower early Friday. Asian stock benchmarks fell; the dollar and Treasury yields edged higher; oil futures extended gains; while gold fell.

Equities:

Stock futures point to a lower open in Europe on Friday ahead of U.S. consumer-price index data.

Focus is also on the 10-year Treasury yield, which is on the brink of 5% for just the second time since the 2008-09 financial crisis.

"Increases in Treasury yields," said Jay Hatfield, chief executive at Infrastructure Capital Advisors, "are unambiguously bad for stocks."

"Could the equity market move into a more protracted downturn if CPI is well out of consensus [Friday]?" said Mark Hackett, chief market strategist for Nationwide. "That's the bigger risk than the somewhat arbitrary nature of 5% yields."

Forex:

Higher oil prices and weaker global equities are supporting the dollar, said CBA's Kristina Clifton. "The USD has been trading like a safe haven during the Middle East conflict," she added.

Bonds:

Markets might already be going too far, making eurozone bond market valuations increasingly attractive, Candriam CIO Nicolas Forest said after the European Central Bank's 25-basis-point rate hike.

"Bond investors are pricing around 50 basis points of additional tightening, which would take the deposit rate to 3.0% by March," he said. Candriam thinks that looks stretched.

Unless the inflation outlook deteriorates further or Europe faces another major energy shock, the bar for tightening beyond what is already priced remains high, he said. "This makes bond markets valuations increasingly attractive."

Energy:

Oil futures stayed above $100 amid renewed escalation across the Middle East.

"As long as oil keeps rising, inflation risks will increase and expectations for Federal Reserve tightening will grow, leaving rates vulnerable to moving higher," said Oxford Economics analyst John Canavan.

The escalation sent the cost of short-term oil supplies surging to their highest level since U.S.-Iran fighting flared in April. North Sea dated crude-a benchmark reported by Argus Media to track on-the-spot physical costs-hit $120 a barrel Thursday.

Metals:

Gold fell early Friday. Investors are waiting for U.S. CPI data for more clues on the Fed's rate path trajectory, DHF Capital's Bas Kooijman said. The precious metal could face price swings from near-term risks including rising oil prices and Middle East developments, he added. Copper edged higher following overnight declines. The base metal fell Thursday after a report that U.S. officials have delayed their decision on whether import tariffs on refined copper are warranted amid inflationary concerns, ANZ said.

"This could take the heat out of the market, after U.S. traders built up a sizable stockpile in anticipation of the tariffs," ANZ said. Iron ore is weighed by expectations of weaker fundamentals despite some near-term support from steel mills' preholiday restocking, Baocheng Futures said.

Demand has stabilized at lower levels, while steelmakers have stepped up purchases ahead of China's National Day holiday, offering some support for prices. However, losses at mills raise concerns about production cuts and a potential negative feedback loop for steel and iron ore demand, Baocheng added.

TODAY'S TOP HEADLINES

The Unrelenting Bond Selloff Puts the 10-Year Yield on the Cusp of 5%

A monthslong selloff in government bonds is skidding into dangerous ground, pushing borrowing costs toward levels that some fear will finally damage the stock market and the economy.

Yields on U.S. Treasurys, which rise when bond prices fall, surged anew on Thursday, lifted by a new jump in oil prices, a firm wholesale inflation report and President Trump's promise to send $5,000 checks to Americans if Republicans keep control of Congress-a pledge that would add more than $1 trillion to the federal deficit.

Iranians Are Running Out of Gas as Economic Squeeze Takes Hold

Long lines at gas stations. Strikes by truckers. A government struggling to maintain the subsidies that had helped much of the population keep their heads above water.

The economic fallout from the war and the American blockade is adding to the pain facing ordinary Iranians who are already struggling with a plunging currency, worsening joblessness and rising prices for everything from food to trash bags.

It's not just Hormuz. Another war is providing fresh price shocks to fuel and food.

Thousands of miles away from the Middle East, another war has entered a difficult new chapter, carrying threats to the global economy that go well beyond diesel and other fuels.

The conflict between Russia and Ukraine, two major exporters of grains and, in the case of Russia, fuels, has intensified. Russia has carried out deadly, regular strikes on Kyiv in recent weeks, and Ukraine has assailed Russia's energy infrastructure with more precision - and is extracting maximum damage.

Oracle Posts Higher Profit, Revenue on Continued Cloud Infrastructure Strength

Oracle posted sharply higher profit and revenue in its latest quarter, with sales from its cloud infrastructure business more than doubling.

The software and cloud-computing company on Thursday said profit for its fiscal first-quarter ended Aug. 31 rose 60% to $4.76 billion, or $1.56 a share from $2.93 billion, or $1.01 a share, in the same quarter a year ago.

The Race for the Next Big Weight-Loss Drug Is On-and China Wants In

SHANGHAI-Chinese biotech companies, rapidly evolving from manufacturers of low-end generic drugs to serious competitors to American pharma giants, are training their sights on one of the most lucrative medicines: GLP-1s.

Today Eli Lilly and Novo Nordisk, with drugs like Mounjaro and Ozempic, are the undisputed leaders of the $80-billion global GLP-1 market, which is dominated by U.S. sales.

SpaceX is inching closer to this lofty $100 billion milestone

SpaceX has notched another deal selling artificial-intelligence computing power, bringing it closer to an ambitious revenue milestone.

Bret Johnsen, SpaceX's SPCX longtime chief financial officer, said at a Goldman Sachs conference on Thursday that the company had signed a deal for AI computing power with an undisclosed company earlier this month. He said the deal is worth $1.1 billion a month beginning in December, and valued it at about $13 billion worth of annualized revenue.

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Expected Major Events for Friday 04:30/NED: Jul International trade

05:00/FIN: Jul Balance of Payments

06:00/ROM: Aug CPI

06:00/UK: Jul Index of production

06:00/UK: Jul UK trade

06:00/UK: Jul Index of services

06:00/UK: Jul Monthly GDP estimates

07:00/SWI: Aug Consumer Sentiment Index

07:00/TUR: Jul Balance of Payments

08:00/FRA: Sep IEA Oil Market Report

08:00/BUL: Jul Trade with third countries - preliminary data

08:00/BUL: Jun Trade with EU Member States - preliminary data

08:00/ITA: 2Q Labour Cost Index

08:00/CZE: 2Q Quarterly Balance of Payments

08:30/UK: Aug Bank of England/Ipsos Inflation Attitudes Survey

08:30/UK: Sep Agents' Summary of Business Conditions

11:30/UK: Aug NIESR Monthly GDP Tracker

16:59/GER: Jul Balance of Payments

16:59/SPN: Jul Budget deficit

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