U.S. Futures Fall as Risk-Off Mood Continues

By Dow Jones Newswires Staff

U.S. futures fell in early European trade as investors continued to pull back from risk at the end of a volatile month.

Traders reacted negatively to Nvidia's earnings Thursday as hand-wringing over the delicate artificial-intelligence ecosystem troubled tech investors. The tech-driven surge in South Korea's Kospi was checked Thursday after the index had gained for six consecutive sessions. Meanwhile, concerns around private credit quality and renewed trade uncertainty weighed on market confidence more broadly.

Safe haven assets saw a boost. U.S. 10-year Treasury yields slipped below 4% to a three-month low, while gold is on track for a 4% weekly gain.

Oil rose, holding above $71 a barrel as investors remained cautious around potential risks to supply in the Middle East, even after positive signals from U.S-Iran talks Thursday. Talks between the two countries will continue next week.

--Equity futures in the U.S. pointed to another day of selling Friday. Futures for the S&P 500 were down 0.2%, while the Dow Jones Industrial Average--which closed flat Thursday--fell 0.4%. Futures for the tech-heavy Nasdaq nudged down 0.1%, with shares in cloud computing company CoreWeave falling 9.4% premarket after it announced earnings.

Nvidia gained 0.8% premarket after falling 5.5% Thursday. 'Big Short' investor Michael Burry flagged concerns over a rise in Nvidia's purchase obligations, which he said could tie the chip maker to paying for unused capacity. "A year ago, the same commitment would have been considered bullish," Swissquote's Ipek Ozkardeskaya said. "Today, the interpretation has flipped on fears that AI capex could slow and leave Nvidia with excess capacity. This looks like peak-cycle behavior."

--Asian markets were mixed on the last day of February trading. South Korea's Kospi finished 1.0% lower, snapping a six-session winning streak, though the index rose 20% for the month. Japan's Nikkei Stock Average closed 0.2% higher. Economic data earlier in the day firmed up rate-hike hopes, despite some reservations over recent days about political pressure deterring Bank of Japan normalization. That gave a little lift to the yen, combining with haven buying and continued trade uncertainty.

The Shanghai Composite in China ended 0.4% higher, though the tech-heavy ChiNext index ended down 1.0%. The yuan softened after the People's Bank of China cut shorting costs for the currency. Markets are looking to China's Two Sessions next week for more clues into Beijing's policy path in the year head. Hong Kong's Hang Seng Index closed up 0.95%, led by real estate stocks such as Sun Hung Kai Properties and Hang Lung Properties. India's Sensex fell 0.8% ahead of GDP data.

--European indexes were largely higher at the open as basic-materials stocks across the continent gained. The U.K.'s FTSE 100 rose 0.35% as miners climbed, with gold and silver miner Fresnillo up 5.6%. Barclays slipped 1% after the collapse of a mortgage-finance company for which the bank arranged loans. Blue-chip indexes in Germany and France both struggled for direction, trading flat. Chemicals company BASF slipped 3.2%, though energy stocks gain in Frankfurt, while in Paris gains for energy group Schneider Electric--up 1.3%--countered a slip in utilities. The Italian FTSE MIB edged up 0.2% as electricity infrastructure company Prysmian climbed 4%, though Banca MPS slipped 2.2% after earnings. Spain's IBEX 35 was up 0.1% as construction group Acciona surged 7.4%.

--The dollar fell against a basket of currencies as tensions between the U.S. and Iran and tariff uncertainty leave investors cautious. Falls are limited as a drop in U.S. tech stocks stoked risk aversion. Still, investors remained wary of buying the dollar amid concerns about tariff policies, central bank independence and geopolitical interventions, including in Iran. Demand from international investors to hedge their U.S. assets against the risk of a dollar decline still "plays a significant role," said BNY's Bob Savage in a note. U.S. producer price data for January will be watched at 1330 GMT. The DXY dollar index fell 0.2% to 97.63, although it remained within its recent tight trading range.

Sterling fell to a 10-week low against the euro after the U.K.'s ruling Labour Party lost a one-off special district election, raising fresh concerns about a leadership challenge for Prime Minister Keir Starmer. The euro rose to 0.8764 pounds, LSEG data show. Sterling falls 0.1% to $1.3461.

--The 10-year U.S. Treasury yield slipped to a three-month low just below 4% in Asian trade as investors remained attentive to geopolitical developments. "The latest round of U.S.-Iran talks in Geneva acted as a catalyst to trim down risk across the board," said Pepperstone's Michael Brown in a note. However, a sustainable fall below the 4% handle isn't in sight, at least for now. "We do remain, just about, within the longer-run range here," the senior research strategist said. Should the 10-year yield trade under 4.00% on a closing basis, that would give U.S. Treasury bulls some degree of control in the near term, he said. The 10-year Treasury yield was last trading at 3.997%, down 1.9 basis points, according to Tradeweb.

Yields on U.K. government bonds, or gilts, edged higher after the special election in Gorton and Denton revived political unease within the ruling Labour Party. Ten-year gilt yields were marginally higher at 4.282% after rising to 4.290% as the market opened.

--Bitcoin rose marginally but continued to struggle for a meaningful recovery after U.S. stocks closed mostly lower overnight. The cryptocurrency edged up 0.2% to $67,622, LSEG data showed.

--Oil prices rose as investors digested news that the U.S. and Iran will resume discussions next week after the latest round of talks wrapped up on Thursday without a deal. Brent crude rose 0.9% to $71.45 a barrel, while WTI was up 0.7% to $65.32 a barrel. Discussions "on a technical level" will take place next week in Vienna, Oman's Foreign Minister Badr bin Hamad al-Busaidi said in a post on X. However, markets remained on edge as any potential escalation of tensions could disrupt energy flows. Traders were also awaiting OPEC+'s meeting on Sunday for signals on future production policy.

--Gold prices were broadly steady in early trading, but are headed for a weekly gain of nearly 4% on news that the U.S. and Iran will continue discussions next week. Futures in New York were flat at $5,193.60 a troy ounce. "Gold's role as a hedge against geopolitical and policy shocks is once again in focus," said Ewa Manthey from ING. At record prices, buyers are becoming more price sensitive, so short-term pullbacks or consolidation are to be expected. However, the main drivers of the rally--central bank diversification, geopolitical tensions, possible policy easing, and renewed ETF demand--remain strong, according to market watchers.

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(END) Dow Jones Newswires

02-27-26 0500ET