US earnings in view as Trump claims Russia-Ukraine energy ceasefire

Australian futures are poised to gain after stock markets rallied into the weekend ahead of the upcoming earnings season, with major banks such as Goldman Sachs and JPMorgan Chase & Co among the early starters.

Tensions in the Middle East heightened as Houthi militants launched an attack on King Khalid International Airport in Riyadh, Saudi Arabia, prompting oil executives at energy majors such as BP and ExxonMobil to pull out of an industry conference this week.

US President Donald Trump claimed to have brokered an energy ceasefire between Russia and Ukraine, having struck a deal with Russia’s President Vladimir Putin to release diesel supplies into global markets.

And bond yields remained elevated, with Pimco warning US 10-year treasuries could hit 6% for the first time in 26 years.

Running with the bulls

Australian futures are pointing to a 0.4% gain when the S&P/ASX 200 index starts trading this week, following a strong lead in the US and Europe on Friday as investors looked ahead to the upcoming earnings season, with strong growth pencilled in by analysts.

The Dow Jones Industrial Average was up 0.8% on Friday, led by Amazon, Cisco Systems and Visa, while the S&P 500 and the tech-heavy Nasdaq Composite both advanced 0.6%.

Companies on the S&P 500 are predicted to grow earnings almost 30% in the quarter and could expand by as much as 35% if they outperform at the average improvement rate, according to FactSet analysis.

“September CPI and producer price data will provide fresh evidence on inflation, while earnings from JPMorgan, Goldman Sachs, Citigroup and other major banks will offer an early read on financial-sector performance,” Moomoo market strategy consultant Greg Boland said in a note. “For New Zealand investors, the question is whether improving earnings can continue to offset the pressure from high borrowing costs.”

SpaceX rallied on Friday after the space and artificial intelligence conglomerate acquired low-band spectrum, letting its Starlink Mobile bypass conventional cell towers in some areas. Telecommunications carriers in the US and Europe were broadly weaker, with the likes of AT&T, Verizon Communications and T-Mobile sliding.

Delta Air Lines was largely flat after the airline cut its earnings outlook as it continued to grapple with persistently high fuel costs.

Across the Atlantic, stock markets were also stronger, with the UK’s FTSE 100 and Germany’s DAX both up 1.1% and France’s CAC 40 gaining 1%.

Escalating tensions

Meanwhile, Brent crude oil futures edged up 0.1% to US$104.43 a barrel heading into the weekend, before Houthi militants attacked the main airport in Riyadh, killing 12 people and injuring more than 300, and threatening an escalation in the Middle East conflict.

The Financial Times reported the attack prompted executives from BP, Exxon, Shell and TotalEnergies to pull out of an industry conference in Riyadh this week.

US President Trump said Russia and Ukraine agreed to stop attacking each other’s energy infrastructure, having struck a deal with Russia’s Putin on Friday to release Russian diesel supplies into the global market. The FT reported the US threatened to stop providing Ukraine with weapons to press Kyiv into a deal.

Still, the Kremlin had yet to confirm the ceasefire, and Trump had previously announced a similar ceasefire in September.

Bond yields remained elevated, with the yield on US 10-year treasuries up 1 basis point at 5.24%, while Pimco chief investment officer Dan Ivascyn told the FT that the yield could hit 6% as investors remained nervous about elevated oil prices, inflation and US debt.

European bond yields eased on Friday, although the spread between French and German yields remained near levels last seen during the continent’s sovereign debt crisis.

Ebos Group will be in focus today after The Australian’s DataRoom reported the pharmacy supplier was being shopped around opportunistically by investment bankers, with the shares down 31% so far this year.

The kiwi dollar traded at 56.12 US cents at 7am from 56.18 cents yesterday.

No major local data are scheduled for today, while Turners Automotive Group sheds rights to its upcoming dividend today.

Reporting by Paul McBeth. Image from Sunira Moses on Unsplash.