A look at the day ahead in U.S. and global markets from Mike

Dolan

Volatility is resurfacing as a turbulent week for world

markets and politics was met on Friday with a global tech outage

that's compounded a recoil in mega-cap shares, already hit by

fears of new chipmaker curbs and underwhelming earnings

guidance.

Major U.S. airlines ordered ground stops on Friday citing

communications issues, while other carriers, media companies,

banks and telecoms firms around the world also reported that

system outages were disrupting their operations.

The Australian government said the problem there appears to

be linked to an issue at global cybersecurity firm Crowdstrike ( CRWD )

, whose stock fell more than 10% out of hours.

The hiatus added to tech sector nerves, where the first

sweep of earnings updates in the current reporting season failed

to jump the increasingly high market bar.

Streaming giant Netflix ( NFLX ) registered a beat late

Thursday as it added more than 8 million subscribers - exceeding

the 5 million expected. But its stock fell overnight on cautious

guidance and after said its advertising business would not

become a primary driver of revenue growth until at least 2026.

There was a similar reaction for Taiwan's chipmaking

bellwether TSMC, whose Taipei-listed shares ended 3.5%

lower on Friday despite its strong earnings and guidance -

dragged down by Sino-U.S. trade concerns and the U.S. market

swoon.

Wall Street futures stayed in the red ahead of Friday's

open, with the VIX volatility gauge hitting its highest

level since April. Thursday's drop in the Nasdaq meant

it was the worst two-day performance for the index since last

October and even the small cap, which had benefited in

the early week rotation away from Big Tech, fell back more than

1%.

Big tech wobbles aside, the backdrop of the increasingly

uncertain U.S. election race jangled nerves.

While Republican challenger Donald Trump - now clear

favorite in betting markets for a return to the White House -

took the stage overnight at his party's convention, pressure on

President Joe Biden to step aside reached a crescendo and press

reports suggest he may announce a withdrawal over the weekend.

Perhaps hedging bets on who may replace Biden, bookmakers

reduced the chances of a Trump win to about 60% from more than

70% on Monday after last weekend's assassination attempt on the

former President.

Interest rate markets were edgier too, with 10-year U.S.

Treasury yields pushing higher despite news of a sharp jump in

weekly jobless claims on Thursday.

While futures are still baking in the first Federal Reserve

interest rate cut for September, the dollar bounced back

from its week's lows.

The euro retreated following Thursday's expected

decision from the European Central Bank to leave its policy

rates unchanged - with markets now expecting a second cut of the

year in September but having doubts about the trajectory after

that.

Sterling fell back to $1.29 after a poor UK retail

sales reading for June.

Japan's yen and China's yuan both slipped too,

with the former knocked back by sub-forecast Japanese inflation

readings that cast some doubt on Bank of Japan tightening.

Japan's government also cut this year's growth forecast on

Friday as consumption took a hit from rising import costs due to

a weak yen.

Mexico's peso nursed sharp losses from the prior

session.

China's mainland stocks held the line again,

however, and ended the week higher with a seven-session winning

streak after the four-day government leadership gathering

concluded on Thursday. Hong Kong shares, however, were

closer to the global mood and lost 2% on Friday.

Due to its lack of detail, Chinese officials acknowledged on

Friday that the sweeping list of economic goals re-emphasised at

the end of the key Communist Party meeting contained "many

complex contradictions", pointing to a bumpy road ahead for

policy.

More concrete measures may emerge next week.

Back on Wall Street, an anxious end to the week beckons with

the patchy trading day due to various tech problems with the

global outage and with a thin diary of events and a close eye on

the weekend's politics.

Key developments that should provide more direction to U.S.

markets later on Friday:

* US corporate earnings: American Express, Fifth Third, Regions

Financial, Huntington Bancshares, Travelers, Halliburton,

Schlumberger

* Canada June producer prices, May retail sales

* New York Federal Reserve President John Williams and Atlanta

Fed President Raphael Bostic speaks