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• The tech-heavy Nasdaq 100 e-minis posted the steepest drop, falling 280 points, or 1.3%.
• Investor sentiment was further dampened by concerns over a potential US government shutdown.
• Markets will closely watch the release of the November personal consumption expenditures (PCE) inflation index

US stock futures fell on Friday as markets braced for the “Triple Witching” hour when approximately $6.6 trillion in options for the quarter are set to expire.

At the time of writing, Dow futures were down 219 points, or 0.51%, while S&P 500 futures declined 45 points, or 0.77%.

The tech-heavy Nasdaq 100 e-minis posted the steepest drop, falling 280 points, or 1.3%.

The declines follow a flat performance on Thursday and steep losses earlier in the week triggered by the Federal Reserve’s hawkish stance during its recent rate cut announcement.
 

Broader concerns weigh on US markets

Investor sentiment was further dampened by concerns over a potential US government shutdown.

Late Wednesday, dozens of Republican lawmakers opposed President-elect Donald Trump’s spending bill, leaving Congress with no clear resolution before government funding expires at midnight.

A failure to extend the deadline could disrupt holiday travel and broader economic activity.

Treasury yields remained elevated, with the 10-year note yielding 4.55% and the 2-year note at 4.28%.

According to the CME Group’s FedWatch tool, the probability of no rate change during the Federal Reserve’s January 31, 2025, meeting stands at 89.3%
 

Focus on inflation data

Markets will closely watch the release of the November personal consumption expenditures (PCE) inflation index, a key measure of price stability.

The data is anticipated to play a pivotal role in shaping market dynamics.

As the Fed’s preferred inflation gauge, the results are expected to guide the direction of bond yields, potentially impacting investor sentiment and monetary policy expectations.

Early inflation data suggests price increases may have accelerated in November, potentially adding to concerns about the Fed’s interest rate trajectory.
 

European markets in gloom

European markets fell sharply on Friday, with the pan-European STOXX 600 dropping over 1% to hit its lowest level in nearly a month.

The downturn was partly driven by comments from US President-elect Donald Trump, who threatened tariffs on the EU unless it agreed to buy more US oil and gas to address the trade deficit.

The FTSE 100 slipped 61 points, or 0.8%, to 8,044, extending Thursday’s 1.1% loss.

France’s CAC 40 fell 98 points, or 1.4%, to 7,196, after a 1.2% decline in the previous session.

Germany’s DAX dropped 230 points, or 1.2%, to 19,740, adding to a 1.4% fall on Thursday.
 

Asian markets end in red

Asian equities posted a mixed performance on Friday as investors remained cautious about the Federal Reserve’s interest rate trajectory and political uncertainty in the US.

China’s Shanghai Composite fluctuated before ending slightly lower at 3,368.07 after the People’s Bank of China kept its loan prime rates unchanged, against market expectations of a cut.

Hong Kong’s Hang Seng edged down 0.16% to 19,720.70 after a volatile session.

Japan’s Nikkei slipped 0.29% to 38,701.90, while the broader Topix index lost 0.44% to close at 2,701.99.

South Korea’s Kospi dropped 1.30% to 2,404.15, weighed by a stronger dollar and political challenges.

India’s Sensex fell 1,176.45 points, or 1.49% to close at 78,041.59.

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