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US Futures Rise as Focus Turns to Inflation Data: Markets Wrap

Margaryta Kirakosian
·4-min read

(Bloomberg) -- US equity futures rose, reversing their earlier slide, as traders turned their focus to inflation data due later this week to gauge the Federal Reserve’s interest-rate path.

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Contracts on the S&P 500 Index and the Nasdaq 100 added 0.3%. Both benchmarks had slid Monday when traders dialed back wagers on expectations of interest rate cuts, pushing up US bond yields. Treasury borrowing costs were steady around 4% on Tuesday.

“Global risk appetite remains constructive overall,” said Benoit Anne, investment director at MFS Investment Management. “The fundamental story remains strong, the US labor market is still in good shape. The direction of travel for interest rates is still going to be lower.”

In premarket trading, Super Micro Computer Inc. rose after shipment data suggested robust demand for its servers, while Honeywell gained as the Wall Street Journal reported the industrial company plans to spin off its advanced materials division.

On the downside, US-listed Chinese shares dropped sharply, after China’s latest pledge to support its economy disappointed investors who had hoped for a fresh wave of stimulus. That also weighed on Europe’s Stoxx 600 index, with China-exposed names such as luxury firm Kering SA and Burberry Plc bearing the brunt.

Focus will now turn to the US consumer inflation data, which is forecast to slow to 2.3% year-on-year from the previous 2.5% reading. Traders are pricing a rate cut of less than a quarter-point at the Fed’s November meeting, though they still see about 48 basis points of policy easing by year-end.

The inflation data is seen as especially key, given the possibility that the ongoing US hurricane season and workers’ strikes will impact this month’s jobs print.

“CPI data probably has more importance now than in prior months, as labor data is going to be more muddied going forward,” said Robert Dishner, senior portfolio manager at Neuberger Berman.

On the corporate front, big US banks kick off the earnings season in earnest from Friday, with companies’ guidance for the coming quarters seen as key.

“Now most of investors will be looking to build a 2025 outlook and getting a steer from the corporate sector on how it is thinking about the earnings picture going into next year,” said Shaniel Ramjee, senior investment manager at Pictet Asset Management.

Commodity markets also felt the lack of fresh China stimulus, with Brent crude futures dropping about 2%.

Key events this week:

  • Fed’s Raphael Bostic, Susan Collins, Philip Jefferson and Adriana Kugler speak, Tuesday

  • Fed minutes, Wednesday

  • Fed’s Lorie Logan, Raphael Bostic, Austan Goolsbee and Mary Daly speak, Wednesday

  • US initial jobless claims, CPI, Thursday

  • Fed’s John Williams and Thomas Barkin speak, Thursday

  • JPMorgan, Wells Fargo kick off earnings season for the big Wall Street banks, Friday

  • US PPI, University of Michigan consumer sentiment, Friday

  • Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman speak, Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 fell 0.6% as of 11:34 a.m. London time

  • S&P 500 futures rose 0.3%

  • Nasdaq 100 futures rose 0.4%

  • Futures on the Dow Jones Industrial Average rose 0.1%

  • The MSCI Asia Pacific Index fell 2.1%

  • The MSCI Emerging Markets Index fell 2.1%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.1% to $1.0988

  • The Japanese yen rose 0.2% to 147.85 per dollar

  • The offshore yuan rose 0.2% to 7.0559 per dollar

  • The British pound rose 0.1% to $1.3098

Cryptocurrencies

  • Bitcoin fell 0.9% to $62,429.91

  • Ether fell 0.5% to $2,428.54

Bonds

  • The yield on 10-year Treasuries was little changed at 4.02%

  • Germany’s 10-year yield was little changed at 2.25%

  • Britain’s 10-year yield was little changed at 4.20%

Commodities

  • Brent crude fell 2% to $79.31 a barrel

  • Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Sujata Rao and Aya Wagatsuma.

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