US Futures Tick Upper Sooner than Debate, Inflation: Markets Wrap

(Bloomberg) — US equity futures posted modest gains ahead of a crunch period that includes key inflation data on Wednesday followed by interest-rate decisions on both sides of the Atlantic.

Most Read from Bloomberg

Contracts on the S&P 500 erased earlier losses to rise 0.3% after the underlying gauge rose 1.2% on Monday, rebounding from its worst start to the month in data going back to 1953. Those on the Nasdaq 100 gained 0.4%. Benchmark Treasury yields were steady.

The market mood is cautious as investors look to balance US recession fears and the likelihood of a soft landing, amid worries the Fed may be falling behind the curve as the labor market cools. Traders will look to the consumer price data for further clues on how fast the Fed will cut interest rates, with some strategists calling for an accelerated pace of easing.

“Even a slight disappointment in any of the upcoming economic releases could trigger a large unwind,” Rebecca Cheong, UBS AG’s top strategist for US equity derivatives, wrote in a note to clients on Tuesday. She’s expecting the S&P 500 to fall at least 10% from its peak within a month. She recommended investors buy tail hedges on ETFs to protect against losses.

US political risk is also back at the forefront, with former President Donald Trump squaring off in a debate with US Vice President Kamala Harris later Tuesday.

“We need to see what actually plays out and will have the possibility of impacting markets,” Grace Peters, global head of investment strategy at JPMorgan Private Bank, said on Bloomberg TV. “We will be watching tariffs, trade policy, taxes.”

Hedge funds have been unwinding their positions to get cash ready for volatility ahead of the Nov. 5 vote, according to Goldman Sachs Group Inc. data.

The European Central Bank’s policy meeting later in the week is also weighing on risk appetite. The central bank meets Thursday, where it’s expected to deliver a second interest rate cut this year to tackle a faltering economy. Morgan Stanley sees the euro sliding toward parity with the dollar within months.

Among individual stocks, Apple shares dropped as much as 1.5% in premarket trading after the company lost its court fight over a €13 billion ($14.4 billion) Irish tax bill. The iPhone 16 launch was met with muted investor reactions as much of the features were leaked beforehand.

Story continues

Key events this week:

• Germany CPI, Tuesday

• US presidential debate between Donald Trump and Kamala Harris, Tuesday

• US CPI, Wednesday

• Japan PPI, Thursday

• ECB rate decision, Thursday

• US initial jobless claims, PPI, Thursday

• Eurozone industrial production, Friday

• Japan industrial production, Friday

• U. Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.3% as of 8:43 a.m. New York time

• Nasdaq 100 futures rose 0.4%

• Futures on the Dow Jones Industrial Average rose 0.1%

• The Stoxx Europe 600 was little changed

• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1028

• The British pound was little changed at $1.3079

• The Japanese yen rose 0.2% to 142.86 per dollar

Cryptocurrencies

• Bitcoin rose 0.6% to $57,350.79

• Ether rose 0.8% to $2,360.03

Bonds

• The yield on 10-year Treasuries was little changed at 3.70%

• Germany’s 10-year yield was little changed at 2.17%

• Britain’s 10-year yield was little changed at 3.86%

Commodities

• West Texas Intermediate crude fell 0.9% to $68.07 a barrel

• Spot gold rose 0.2% to $2,510.21 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael Msika and Henry Ren.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.