US stock futures rebound, Twitter falls

US stock index futures rebounded ahead of the Wall Street open on Friday, keeping fears of a bear market at bay, though Twitter shares slid after Elon Musk put his $44 billion deal for the company temporarily on hold.

Markets are becoming anxious about the possibility of recession, with the S&P getting close to a bear market on Thursday, at nearly 20 per cent off its January all-time high.

In an interview late on Thursday, US Federal Reserve Chair Jerome Powell said the battle to control inflation would "include some pain".

Powell repeated his expectation of half-percentage-point interest rate rises at each of the Fed's next two policy meetings, while pledging that "we're prepared to do more".

The war in Ukraine has aggravated supply chain disruptions and inflationary pressures already in place after more than two years of the Covid-19 pandemic, but stocks enjoyed a bounce on Friday.

"There's an awful lot of negative sentiment out there, we're looking at a 40 per cent chance of recession," said Patrick Spencer, vice chairman of equities at Baird Investment Bank.

"A lot of fund managers have cut their equity allocations and raised cash, though we think this is a correction rather than a bear market."

S&P futures jumped 1.09 per cent after the S&P index dropped 0.13 per cent overnight, though the index is still eyeing a sixth straight week of declines.

Twitter shares fell 17.7 per cent to $37.10 in pre-market trading after Musk suspended his plans to buy the company, saying he was awaiting details in support of calculations showing spam and fake accounts represent less than 5 per cent of users.

"This is straight out of the Musk playbook, keeping shareholders on their toes," said Michael Hewson, chief markets analyst at CMC Markets.

MSCI's world equity index rose 0.34 per cent after hitting its lowest since November 2020 on Thursday, though it was heading for a 4 per cent fall on the week, its sixth straight week of losses.

European stocks rallied 1.44 per cent and Britain's FTSE 100 gained 1.64 per cent.

Markets are likely to experience a short-term rebound before resuming the sell-off which has sent Wall Street's Nasdaq tech index down over 25 per cent since the beginning for of the year, BofA analysts wrote in a weekly strategy note.

Investors liquidated global equity funds worth $10.53 billion in the week ended May 11, compared with $1.65 billion of net selling in the previous week, according to Refinitiv Lipper.