US stock futures fluctuated after Friday’s selloff and oil neared $95 a barrel, highlighting inflationary pressures just as policymakers prepare for interest-rate meetings.
(Bloomberg) — US stock futures fluctuated after Friday’s selloff and oil neared $95 a barrel, highlighting inflationary pressures just as policymakers prepare for interest-rate meetings.
In Europe and Asia, equities dropped sharply, mirroring the decline that took the S&P 500 down more than 1% at the end of last week. Societe Generale SA slumped as much as 11% after cutting profitability targets. Apple Inc. gained in US premarket trading, with analysts positive about early signs of demand for the latest iPhone.
A three-week rally in oil prices has pushed benchmark Brent higher by 11%, complicating the task of central bankers around the world in their fight against inflation. The Federal Reserve’s policy announcement on Wednesday will be followed by those from the Bank of England on Thursday and the Bank of Japan a day later.
“This week will be bumpy,” said Francois Rimeu, a fund manager at La Francaise Asset Management in Paris. “Pretty tough messages are expected from central bankers.”
US Treasury yields ticked higher, with the policy-sensitive two-year rate above 5%.
Monday’s subdued mood in stock markets matched the tone of a note from Morgan Stanley strategists, who said investors have turned more cautious. The team led by Michael Wilson said there’s a growing debate among clients about whether a recession has been avoided or just delayed.
“The majority of investors we’ve spoken with are in the ‘pushed out’ camp and are of the view that 2024 is now looking like a more challenging year for risk assets relative to 2023,” Wilson wrote in a note.
On the outlook for oil, traders will be monitoring clues on prospects for global supply when Saudi Energy Minister Prince Abdulaziz bin Salman addresses an industry conference later Monday. Hedge funds last week boosted their bullish wagers on Brent and US crude to a 15-month high. Brent has gained 11% in three weeks.
Among currencies, the dollar weakened against most of its G-10 peers.
Fed Outlook
A resilient US economy will prompt the Fed to pencil in one more interest-rate hike this year and stay at the peak level next year for longer than previously expected, according to economists surveyed by Bloomberg News.
“A number of Fed speakers have taken a slightly more cautious tone recently, mentioning that risks have become more two-sided and talking of the ability to ‘proceed carefully,’” said Credit Agricole strategists led by Jean-François Paren. “That said, it is far too early to declare victory, and the Fed will want to keep the possibility of further tightening on the table.”
In Asia, a gauge of the region’s shares was dragged down by tech names. Hong Kong’s Hang Seng Index slipped 1.4%, while China’s CSI 300 Index erased losses as traders drew support from data last week that pointed to signs of stabilization.
Elsewhere, Chevron Corp. resumed full production from a liquefied natural gas export facility in Australia that suffered a fault last week, even as union members continued strikes at the site. That took some pressure off natural gas prices.
Key events this week:
- Apple expected to release the iPhone’s latest operating system, iOS 17, Monday
- Reserve Bank of Australia issues minutes of September’s policy meeting, Tuesday
- OECD releases interim economic outlook report on the global economy, Tuesday
- Eurozone CPI, Tuesday
- Bloomberg Future of Finance Conference in Frankfurt, with speakers to include German Finance Minister Christian Lindner, Tuesday
- ECB Executive Board member Frank Elderson speaks, Tuesday
- Bank of Canada Deputy Governor Sharon Kozicki speaks, Tuesday
- Japan trade, Wednesday
- China loan prime rates, Wednesday
- UK CPI, Wednesday
- Federal Reserve policy meeting, followed by Chair Jerome Powell’s news conference, Wednesday
- Bank of Canada issues summary of September’s policy meeting, Wednesday
- Bank of England policy meeting, Thursday
- ECB Executive Board member Isabel Schnabel chairs panel, Thursday
- ECB chief economist Philip Lane speaks, Thursday
- Japan CPI, PMIs, Friday
- Bank of Japan rate decision, Friday
- Australia PMIs, Friday
- China’s Bund Summit, Friday
- Eurozone S&P Global Eurozone PMIs, Friday
- UK S&P Global / CIPS UK Manufacturing PMI, Friday
- ECB Vice President Luis de Guindos speaks, Friday
- US S&P Global Manufacturing PMI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 6:04 a.m. New York time
- Nasdaq 100 futures rose 0.1%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 fell 0.6%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.2% to $1.0673
- The British pound rose 0.2% to $1.2402
- The Japanese yen rose 0.2% to 147.61 per dollar
Cryptocurrencies
- Bitcoin rose 1.9% to $26,946.88
- Ether rose 1.4% to $1,640.66
Bonds
- The yield on 10-year Treasuries was little changed at 4.34%
- Germany’s 10-year yield advanced two basis points to 2.69%
- Britain’s 10-year yield advanced four basis points to 4.39%
Commodities
- West Texas Intermediate crude rose 0.6% to $91.31 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sagarika Jaisinghani, Tassia Sipahutar and Lynn Thomasson.
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