NEW YORK: U.S. stock index futures edged higher on Thursday as investors grew more confident that tensions in the Middle East may have peaked, while a wave of solid earnings eased concerns about the economy.
Although no agreement to end hostilities involving Iran has been reached, hopes of diplomatic progress have lifted sentiment.
The benchmark S&P 500 and Nasdaq closed at record highs on Wednesday, signalling renewed appetite for risk assets if diplomacy remains on track.
“Markets have learned to anticipate reversals after aggressive policy threats. That is not complacency so much as adaptation,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.
At 4:42 a.m. ET, Dow e-minis were flat, S&P 500 e-minis rose 6 points, or nearly 0.1 per cent, and Nasdaq 100 e-minis gained 57.25 points, or 0.2 per cent.
Sentiment also drew support after a senior Israeli official said Israel’s cabinet had met on Wednesday to discuss a possible ceasefire in neighbouring Lebanon.
Such a ceasefire could remove a key obstacle to efforts to secure a broader peace agreement. President Donald Trump has also indicated Washington could yet reach a deal with Tehran.
However, equities remain vulnerable if diplomacy gives way to renewed escalation.
“Ongoing negotiations may bring more reversals and contradictory news, keeping trading conditions perilous,” Shalett said.
RESULTS STEER SENTIMENT
Market moves could also become more stock-specific as the earnings season gathers pace, offering fresh catalysts for investors.
U.S. beverage giant PepsiCo is scheduled to report quarterly results, alongside Travelers, Charles Schwab and a host of other companies. Netflix is also due to report after the market closes.
PepsiCo and Netflix dipped 0.2 per cent each in premarket trading, while Schwab slipped 0.4 per cent.
Most banks that have reported earnings so far this week topped estimates and said the consumer remained financially healthy, easing concerns about the main growth engine of the U.S. economy.
“With bets placed that the war has passed peak escalation and geopolitical risks are falling, investors have decided they do not want to miss out on a slice of this earnings growth,” said Kyle Rodda, senior financial market analyst at Capital.com.
“The move in major U.S. indices this month has been nothing short of remarkable. The risk from here is that the bar is set too high and investors are paying for earnings that may not materialise.”
Beaten-down sectors such as technology and software stocks have regained their footing this week. Small caps are also gaining ground, with the Russell 2000 index about 0.8 per cent below its intraday record high.
Big movers in the premarket session included Voyager Technologies, which rose 7.9 per cent after NASA signed an order for the company to conduct the seventh private astronaut mission to the International Space Station, marking the company’s first selection for such a mission.
Sneaker maker Allbirds slumped 34.2 per cent after rising nearly sevenfold in the previous session on enthusiasm about its pivot to artificial intelligence._Reuters
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