Futures rise as Dow eyes fourth straight weekly decline

Dow Jones futures climbed by 0.14% to reach near 51,790 during European trading hours on Friday. S&P 500 futures increased by 0.33% to approach 7,780, while Nasdaq 100 futures gained 0.34% to trade close to 30,870. US stock futures benefited from easing Treasury yields, which had surged sharply on Thursday, reaching multi-year highs.

The 30-year US Treasury yield peaked at 5.502%, its highest level since June 2004, while the benchmark 10-year Treasury yield surged to 5.225%, surpassing a level not seen since June 2007. A drop in oil prices further contributed to reduced risk aversion, facilitated by talks between the US and Iran over a phased deal to reopen the Strait of Hormuz and lift the US blockade on Iranian ports.

In regular US trading on Thursday, major indices experienced modest gains, with the Dow Jones down 0.31% and both the S&P 500 and Nasdaq Composite remaining largely unchanged. Overall market sentiment remained cautious due to hawkish statements from Federal Reserve officials. Strong US economic data had fueled concerns about inflation, leading to expectations of further monetary tightening by the central bank in its upcoming meetings.

With no major corporate earnings announcements planned for the day, investors shifted their focus to upcoming economic indicators, such as the University of Michigan consumer sentiment report and durable goods data, scheduled for release on Friday. Strategists at OCBC warned that Asian currencies may remain under pressure in the near term, as elevated oil prices and US Treasury yields continued to weigh on Asian currencies, albeit to varying degrees.

Thinner liquidity conditions over the weekend could lead to more volatile moves, potentially exacerbating market volatility across the region. The Dow Jones Industrial Average, a prominent stock market index, comprises the 30 most actively traded stocks in the US. Unlike capitalization-weighted indices, it is price-weighted, calculated by summing the prices of its constituent stocks and dividing them by a factor, currently 0.152.

Established by Charles Dow and published in the Wall Street Journal, the index has faced criticism for its limited representation of the broader market, tracking just 30 conglomerates compared to the S&P 500. Various factors influence the Dow Jones Industrial Average (DJIA), including quarterly earnings reports of component companies, US and global economic data, and interest rates set by the Federal Reserve (Fed), which affect the cost of credit and impact investor sentiment.

Dow Theory, developed by Charles Dow, helps identify the primary market trend by comparing the movement of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA), and considering volume as a confirmatory factor. The theory identifies three trend phases: accumulation, public participation, and distribution.

Investors can trade the DJIA through ETFs like the SPDR Dow Jones Industrial Average ETF (DIA), futures contracts, options, or mutual funds, providing exposure to the index's overall performance.