U.S. stock futures fluctuate at high levels, European stocks are under pressure and declining, the automotive sector leads the decline, and the U.S. dollar rises

After experiencing a record-breaking week, the upward momentum of global stock markets has paused, primarily due to disappointing earnings reports from European companies such as Volkswagen and Puma, while investor expectations for the Federal Reserve to maintain a hawkish stance have increased, leading to a cautious market sentiment.

On Friday, European markets became the center of global sentiment drag. The Stoxx Europe 600 index fell by 0.6%. The U.S. market performed steadily, with S&P 500 futures showing little change. The dollar strengthened, and the yield on the 10-year U.S. Treasury rose by one basis point to 4.41%.

Investors are closely watching the deadline for U.S. tariff increases next week, as well as the progress of trade negotiations with countries and regions such as China and the European Union.

• Major European stock indices opened lower, with the German DAX index down 0.7%. The French CAC 40 index fell by 0.4%. The Euro Stoxx 50 index dropped by 0.45%. The UK FTSE 100 index opened down 0.15%.
• The U.S. market performed steadily, with S&P 500 futures showing little change.
• The benchmark index of the Vietnamese stock market rose by 0.7%, reaching a historical high.
• The U.S. dollar spot index rose by 0.12%.
• The dollar against the yen expanded its intraday gain to 0.50%, currently at 147.73. The euro against the yen rose by 0.3% to 173.25, reaching a one-year high.
• The yield on the 10-year U.S. Treasury rose by two basis points to 4.41%.
• The yield on the 10-year German government bond rose by four basis points to 2.74%, the highest level since March.
• Bitcoin fell by 3.2% to $115,019.51.
• Spot gold fell by 0.4% to $3,353.55 per ounce.

European Auto Stocks Earnings Warning Leads to Market Decline

The pessimistic earnings outlook from automotive and parts manufacturers was the most direct trigger for the market decline on Friday.

French auto parts supplier Valeo saw its stock price plummet by 12.4% after lowering its full-year sales forecast. Europe's largest automaker, Volkswagen, also downgraded its earnings outlook due to tariff difficulties, with its stock price falling by 2.4%. Its truck subsidiary Traton was also under pressure due to a significant downward revision of its full-year forecast, with its stock price plunging by 8.1%. This series of negative news collectively led to a 1.4% decline in the European automotive stock index, becoming the largest drag on the market.

In addition to the automotive industry, the weak performance of certain consumer brands also exacerbated market pessimism. German sports brand Puma's stock price plummeted by 18.7% after it lowered its full-year earnings outlook and reported weaker-than-expected quarterly results, making it the largest decliner in the pan-European STOXX 600 index.

Meanwhile, most regional stock markets in Europe recorded declines, with overall market risk aversion sentiment rising.

Fed's Hawkish Expectations Rise

Before the negative news from the European market, the U.S. stock market had been on a strong upward trajectory due to solid earnings season performance and optimistic sentiment regarding trade agreements, with the S&P 500 index setting 10 historical highs in 19 trading days However, as the Federal Reserve's policy meeting approaches next week, market sentiment is shifting.

The US Dollar Index rose 0.12% to 97.61.

"The market now believes that the likelihood of the Federal Reserve Chairman maintaining a hawkish tone at the upcoming meeting is greater," said Hebe Chen, an analyst at Vantage Markets in Sydney:

"Political dynamics and economic indicators reinforce the Federal Reserve's more cautious stance."

In the face of various risks lurking behind the market's record rise, investors' risk aversion is on the rise. Institutional trading departments, including Goldman Sachs and Citadel Securities, have begun advising clients to take advantage of the currently low costs to buy hedging tools to guard against potential pullbacks in the US stock market. Goldman Sachs' trading department wrote in a report to clients on Monday:

"If you're feeling nervous, the market is making it very easy to rent hedges."