Stock futures slip as traders close out brutal year for global equities; Southwest slides as flight chaos looks set to clip Q4 earnings; Bahamas regulators hold $3.5 billion in FTX Digital assets; President Biden signs $1.7 trillion spending bill, averting government shutdown and Congressional Democrats to release Trump tax returns after years-long battle to keep them private.
Five things you need to know before the market opens on Friday December 30:
1. — Stock Futures Slip As Traders Close Out Brutal Year For Global Equities
U.S. equity futures inched lower Friday as global stocks closed out their worst year in more than a decade, pummeled by recession concerns, China’s Covid crisis and the relentless run of interest rate hikes from central bank around the world.
The MSCI World index, the broadest measure of global shares, is set for a near 20% decline this year, its worst performance since 2008, while shedding more than $18 trillion in equity value. U.S. stocks, on pace for their worst year since the global financial crisis, have been hit by a series of outsized Federal Reserve rate hikes which has lifted borrowing costs, clipped business investment and hammered the domestic housing market.
The Fed, in fact, executed 7 rate hikes this year, taking its key lending rate to a range of 4.25% to 4.5%, which central banks across the ten most actively traded currencies in the world combined for a total of 54 rate increases, with only the Bank of Japan keeping its benchmark levels unchanged. Emerging market central banks combined for a collective total of 93 rate hikes.
The knock-on effect has lifted the U.S. dollar index, which tracks the greenback against a basket of its global peers, some 8% higher this year, marking its strongest annual performance since 2015. The index was last seen 0.11% lower on the session at 103.723.
Trading volumes are likely to be thin on the final session of the year, given the lack of major economic data releases and the pending market holiday on Monday January 2, with investors likely tracking moves in the bond market for broader direction.
Benchmark 10-year notes were little-changed at 3.848% in overnight trading, while 2-year notes held at 4.399% following a busy week for new auctions that saw $85 billion in new paper hit the market.
On Wall Street, futures contacts tied to the S&P 500, which is down 19.24% for the year, are looking at a modest 12 point opening bell decline while those linked to the Dow Jones Industrial Average are priced for an 85 point pullback, The tech-focused Nasdaq, down 33.03% for the year, is set for a 40 point opening bell dip.
Overnight in Asia, Japan’s Nikkei 225 ended the year down 11%, while the Europe-wide Stoxx 600 fell 0.58% in Frankfurt, on pace for a 12.2% annual decline, its worst since 2018.
2. — Southwest Slides As Flight Chaos Looks Set to Clip Q4 Earnings
Southwest Airlines (LUV) – Get Free Report shares moved lower in pre-market trading after the carrier cautioned it will likely take a financial fourth quarter hit from disruptions and refunds linked to its chaotic Christmas weekend.
CFO Ryan Green told reporters late Thursday that hotel reimbursement costs, meal vouchers, car rentals and refunds from around 16,000 cancelled flights will “certainly be an impact to the fourth quarter”, adding the tally will be made public over the coming weeks.
Southwest is expected to publish its fourth quarter earnings in late January, and had forecast a 13% to 17% gain — from 2019 levels — in operating revenues with “strong” profits and margins.
Southwest shares were marked 0.33% lower in pre-market trading to indicate an opening bell price of $33.27 each.
3. — Bahamas Regulators Hold $3.5 Billion in FTX Digital Assets
Regulators in the Bahamas are holding around $3.5 billion in assets from a division of the bankrupt FTX trading platform and plan to distribute funds to non-U.S. creditors or liquidators.
The Securities Commission of the Bahamas said late Thursday that it seized digital assets valued at $3.5 billion — based on market prices at the time — in the immediate hours after FTX Digital Markets filed for Chapter 11 bankruptcy protection in the United States on November 12.
Executive director of the commission, Christina Rolle said the assets “remain under the sole control of the commission”, suggesting they could be paid directly to international customers and creditors, bypassing the ongoing bankruptcy proceedings for FTX’s U.S. businesses, which is being managed by John J. Ray.
In a separate case, the U.S. Department of Justice is investigating the disappearance of around $372 million in digital assets from FTX on November 11, just prior to the bankruptcy filing.
4. — President Biden Signs $1.7 Trillion Spending Bill, Averting Government Shutdown
President Joe Biden singed a near $1.7 trillion spending bill late Thursday, paving the way for funding of the federal government over the current fiscal year and preventing a near-term shutdown.
President Biden signed the $1.66 trillion bipartisan omnibus bill, which comprises around 4,000 pages of legislation and marks the final act of the outgoing 117th Congress following November’s mid-term elections.
The bill, which the President signed while on vacation in St. Croix, includes a record $858 billion in military spending, $772 billion in health, education and veterans programs, $45 billion in fresh aid to the Ukraine and a wider ban on the use of Tik Tok on government devices.
President Biden said the spending commitments represent ““key priorities for our country and caps off a year of historic bipartisan progress for the American people.”
5. — Congressional Democrats To Release Trump Tax Returns After Years-Long Battle To Keep Them Private
Congress will publish six years of tax returns filed by Donald Trump Friday, ending a near protracted battle between the former President and Democratic lawmakers.
The Democratic-controlled House Ways and Means Committee will release redacted versions of Trump’s tax filings from 2015 to 2020, removing personal details such as social security numbers and address information, just days ahead of a a change in Congressional control to their Republican rivals,
Reports suggest the filings will show the former President paid little or no taxes in three of the years covered in the releases, while offering a rare glimpse into his personal and professional financial affairs.
While under no legal obligation to release his tax records, Trump snubbed a decades-long convention in refusing to do so when he first ran for President in 2016. Tax records released earlier this year by President Joe Biden showed a combined family income of $610,702 in 2021, with he and First Lady Jill Biden paying $150,439 in federal income taxes,