U.S. stock futures edged cautiously higher on Monday ahead of business activity surveys that may confirm or cast doubt on market forecasts for more large-scale rate cuts by the Federal Reserve. S&P 500 futures remained steady after strong gains last week. Investors are closely watching upcoming surveys on business activity to gauge the likelihood of further rate cuts by the Federal Reserve, which could have significant implications for global markets.
Euro and German two-year yields dropped following weak data. China eased economic policies, while Switzerland is tipped for at least a 25 basis point rate cut. Gold prices stayed close to their all-time peak.
Asia-Pacific markets mostly rose Monday as investors digested monetary policy decisions from Japan, China, and the U.S. Federal Reserve’s sharp rate cut last week. Recent data showed China’s youth unemployment rate climbed for a second consecutive month to its highest level this year, reflecting the cooling labor market amid a weakening economy. In response, the People’s Bank of China supplied 234.6 billion yuan ($33.29 billion) to the banking system through open market operations to “maintain reasonably sufficient liquidity.” It lowered the 14-day reverse repo rate to 1.85% from 1.95%.
The Reserve Bank of Australia begins its two-day policy meeting on Monday, with analysts predicting it will maintain the benchmark interest rate at 4.35%. Attention will be on whether the RBA moves away from its hawkish stance following the Fed’s bold 50-basis-points rate cut. Singapore’s headline and core inflation rose more than expected in August, up 2.2% and 2.7% year-on-year, respectively.
The core inflation rate, which excludes accommodation and private transport, was higher than the 2.6% forecasted.
Futures drift ahead of Fed update
Australia’s S&P/ASX 200 fell 0.69% in other markets to close at 8,152.9. South Korea’s Kospi gained 0.33% to close at 2,602.01, with the small-cap Kosdaq adding 0.91% to 755.12.
Hong Kong’s Hang Seng Index dropped 0.2% in its final hour of trading, while mainland China’s CSI 300 rose 0.37% to close at 3,212.76. The Taiwan Weighted Index increased by 0.57% to end at 22,285.53. The three major U.S. indexes saw gains last week.
The Dow Jones Industrial Average advanced 1.36% for its fifth positive week in the last six, closing at a record high on Friday. The S&P 500 and Nasdaq Composite also posted weekly gains of 1.62% and 1.49%, respectively. However, the Dow closed Friday with a slight gain of 0.09% to 42,063.36, while the S&P 500 and Nasdaq pulled back slightly.
Futures on the S&P 500 and the Nasdaq 100 were down by about 0.29% and 0.25% at 3:30 a.m. EST, while futures tied to the Dow Jones Industrial Average moved lower by 0.27%. Last week, the S&P 500 and the Dow Jones crossed the 5,700 and 42,000 levels, respectively, for the first time, fueled by the Fed’s first rate cut in four years. In corporate news, semiconductor company Micron Technology is scheduled to announce its results on Wednesday, while Accenture and Costco will declare their results on Thursday.
Key economic releases on Monday include S&P Global’s data on the Manufacturing and Services sectors. Investors will also keenly follow speeches by the Federal Reserve Presidents of Atlanta, Chicago, and Minneapolis to gain insights into the central bank’s next move. Meanwhile, the U.S. 10-year treasury yield moved higher, floating near 3.758% at the time of writing.
WTI crude oil futures are trending higher in the commodities market, hovering near $71.30 per barrel.
