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

Dolan

Wall Street nursed a bruising on Walmart's ( WMT ) downbeat results,

casting a cloud over the U.S. consumer just as more buoyant

European markets awaited the weekend's German election.

Another blizzard of often conflicting influences from

geopolitics, trade, monetary policy and corporate earnings

barrelled into world markets over the past 24 hours.

But it was the retailing giant's miss on its sales

and profit forecasts - citing the turbulent political

environment and trade uncertainties ahead - that cut deepest.

Walmart's ( WMT ) stock recoiled 6.5%, denting a rise of over 80% to

record highs over the past year and a strong outperformance

since President Donald Trump's election win.

Following last week's disappointment on January U.S. retail

sales, the miss dragged other retailers down in the slipstream

and Amazon ( AMZN ) lost almost 2% too. The S&P500 ended

off almost 0.5% and futures struggled to hold the line on

Friday.

And adding some anxiety to the corporate fallout from

radical U.S. government cuts, Palantir ( PLTR ) - which provides

governments with services such as software that visualizes army

positions - shed 5% after the Pentagon said it was looking at

potential budget cuts for the fiscal year 2026.

Flash business surveys for February now top today's macro

diary, with AI chip behemoth Nvidia's ( NVDA ) results due next week.

The Philadelphia Federal Reserve's February surveys of its

mid-Atlantic region also showed manufacturing activity readings

tumbled this month by the most in nearly five years, and jobless

claims ticked higher in the latest week.

Even as Fed officials continued to signal caution about

easing policy any further amid persistent inflation

uncertainties, Treasury yields fell back on the

retail and business readouts.

Reining in debt yields further were comments from Treasury

Secretary Scott Bessent, who said any move to increase the share

of longer-term Treasuries in government debt issuance is "a long

way off". That's despite his long-standing criticism of the

previous Treasury boss Janet Yellen for front-loading debt in

short-term maturities.

"We're going to see what the market wants," he said.

The retreat in yields and stocks dragged the dollar index

back to its lowest level of the year - although the

greenback found its feet again on Friday and clawed back some of

those losses.

The dollar drop on Thursday was mostly concentrated against

Japan's yen, where speculation about another Bank of

Japan interest rate rise as soon as next month has gone up a

notch.

Japanese inflation released on Friday backed up that talk,

as headline annual price rises hit 4% for the first time in two

years last month. Former central bank board member Sayuri Shira

said March would be a 'good opportunity' to lift rates again.

But, in a confusing twist, the yen retreated as Bank of

Japan Governor Kazuo Ueda said on Friday the central bank stands

ready to increase government bond buying if long-term interest

rates rise sharply.

Ueda's remarks helped push down the 10-year Japanese

government bond yield to 1.42% from 1.455%

earlier in the day, its highest since November 2009.

Whether Ueda's comments reinforce speculation about rate

rise preparations or flag concern about its impact is a matter

of debate. But Japan's Nikkei stock index ended higher.

In Europe, Germany's election on Sunday is front of mind -

with tension over Trump's shocking turn of stance on Ukraine

this week and still-looming tariff threats as a backdrop.

Hopes that a new German government will have enough backing

to lift its self-imposed 'debt brake' after the election and up

defense and investment spending are at stake - with the prospect

largely behind European stocks outperformance this year.

Germany's benchmark DAX index nudged higher on

Friday and domestic-focused German mid caps were up 0.8%, having

hit a seven-month-high early this week. Helping that was the

release of business surveys showing activity in Germany's

private sector had picked up slightly in February.

The euro fell back slightly from near 3-week highs as

the vote is awaited. One key to the results will be whether

smaller parties clear a 5% threshold to enter parliament -

critical to the math on whether a new coalition gets the two

thirds majority to reform the debt clause in the constitution.

Elsewhere, sterling briefly hit a new high for the

year against the dollar after a surprisingly upbeat retail sales

report for January.

And Chinese shares rallied again, led by a buoyant tech

sector on Hong Kong after Alibaba's ( BABA ) earnings beat late Thursday.

The Hang Seng ended 4% higher on the day.

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

markets later on Friday:

* US flash February business surveys from S&PGlobal, US January

existing home sales, University of Michigan's final Feb consumer

survey

* Federal Reserve Vice Chair Philip Jefferson and San Francisco

Fed President Mary Daly speak; European Central Bank chief

economist Philip Lane speaks; Bank of Canada governor Tiff

Macklem speaks

(By Mike Dolan, Editing by William Maclean

[email protected])