US Futures Fall, Dollar Gains on Recession Fears

US stock futures traded slightly lower, coming back from a deeper dip Friday as

recession

fears continued to weigh on the market, with investors bracing for a tough second half of the year.

US stock markets looked set to build on Thursday’s losses, which saw the S&P 500 book its worst first-half performance in more than five decades.

Futures on the S&P 500 were down 0.07% as of 6 am ET, recovering from a deeper drop earlier in premarket trading. Dow futures were down 0.11%, while those on the Nasdaq dropped 0.17%.

Investors are increasingly downbeat about the prospects for stocks, concerned the

Federal Reserve

could tip the US economy into recession as it aggressively hikes interest rates to rein in surging inflation.

Analysts say markets are headed for more

volatility

as Russia’s war with Ukraine and post-pandemic issues add to the risk of economic slowdown.

“The prospect of the Fed being forced into hikes to fight stubborn inflation while growth is rolling over appears to be something the markets will have to wrestle with sooner rather than later,” Deutsche Bank’s Jim Reid said in a daily note.

A fresh clue to economic health is due later Friday with the release of the Institute for Supply Management’s report on US manufacturing activity. Data out Thursday showed inflation-adjusted US personal spending fell for the first time in 2022, shedding doubt on the idea that consumer spending will support US growth.

In Europe, stocks rose Friday, with the pan-continental Stoxx 600 up 0.11%, even after preliminary figures showed annual inflation in the eurozone hit a new record high of 8.6%. Frankfurt’s DAX gained 0.42%, and Paris’ CAC 40 added 0.46%.

In Asia, the Shanghai Composite closed 0.32% lower, with Hong Kong’s stock market shut for a holiday, despite Caixin data showing factory activity in China grew for the first time in four months as COVID-19 curbs were eased. Tokyo’s Nikkei 225 dropped 1.73% after a Bank of Japan survey showed a drop in business sentiment.

Meanwhile, the US dollar strengthened as investors turned to safe-haven assets. The dollar index rose 0.27% to $104.97.

“Our view remains that the dollar should continue to count on a rather solid floor in the third quarter thanks to the Fed’s front-loaded rate hikes and a still challenging environment for global risk assets due to tighter

liquidity

and fears of a global slowdown,” analysts at ING said.

Here’s how other major assets are performing:

• In oil markets, WTI crude rose 1.69% to trade at $107.55 a barrel, while Brent crude gained 1.79% to hit $110.98 a barrel.
• The yield on the benchmark 10-year Treasury note edged up to 2.976%, from 2.970% Thursday.
• The euro dropped 0.15% to $1.0469 after the eurozone inflation reading release.
• Bitcoin continued to trade below $20,000, and was most recently 1.79% higher at $19,413.18, according to CoinMarketCapas concerns about a credit crisis rattle the crypto industry.