A look at the day ahead in U.S. and global markets from Dhara Ranasinghe
Brewing industrial action looks set to test the resilience of the U.S. economy, and especially jobs markets, that have taken policymakers and markets by surprise given the scale of interest rate rises over the past year.
The United Auto Workers union launched simultaneous strikes at three factories owned by General Motors (NYSE:GM), Ford and Chrysler parent Stellantis early on Friday, kicking off the most ambitious U.S. industrial labor action in decades.
The walkout by more than 12,000 autoworkers could slow an outperforming U.S. economy should it drag on - even risking the first monthly net drop in payroll employment in nearly three years - but is unlikely on its own to trigger a recession.
Yet join the dots elsewhere around the globe and it's not hard to see why markets should pay more attention to industrial strife against a backdrop of higher inflation and a cost of living crisis in many developed economies.
Workers at Chevron (NYSE:CVX)'s liquefied natural gas Australia projects, accounting for 5% of global supply, started work stoppages a week ago after talks over pay and conditions failed. Strike action there has helped push up gas prices.
Brighter data from China meanwhile has helped lift sentiment across global markets, except for China, heading into the weekend.
China's factory output and retail sales grew at a faster pace in August, but sentiment remains fragile given the country's property sector woes with expectations for bigger stimulus high.
While Japan's Nikkei rose 1% and European shares opened higher, China shares reversed earlier gains.
European markets continued to cheer the likely end of the European Central Bank's rate hiking cycle. The ECB on Thursday lifted rates to a record high of 4% but signalled that tightening was likely to be its last.
And even if the ECB suggested rates would stay higher for longer, markets are already looking past that to rate cuts as economic growth weakens.
Wall Street was tipped to open higher, judging by trade in U.S. equity futures.
August U.S. industrial production data could add to recent signs of economic strength supporting investor sentiment.
Lastly, hopes for a turnaround in the moribund market for initial public offerings are running high after SoftBank's Arm Holdings soared almost 25% above their Nasdaq debut price on Thursday.
Arm shares jumped over 7% in pre-market trade Friday.
Key developments that should provide more direction to U.S. markets later on Friday:
NY Sep manufacturing index
U.S. Aug manufacturing output
Uni of Michigan Sept consumer sentiment survey