Fundamental Analysis

Futures Edge Up On Rate Cut Hopes; Fed Speakers Awaited

U.S. stock index futures inched higher on Monday as expectations that the Federal Reserve was done with its interest rate hikes gained steam ahead of commentary by a slew of policymakers later in the week.

Wall Street’s main indexes posted their best weekly performance in about a year on Friday, boosted by tumbling U.S. Treasury yields as a weaker-than-expected monthly payrolls report spurred hopes that the Fed could start cutting rates next year.

“US payroll report was at the sweet spot for markets- weak enough to suggest that Fed should be done with rate hikes, but not so weak as to raise alarm bells for the economy,” said Mohit Kumar, chief Europe economist at Jefferies in a note.

“As long as rates stabilise, equities can still have a leg higher over coming weeks.”

Traders’ bets that the Fed will hold interest rates steady in December stand at 90%, while pricing in an about 80% chance the first policy easing would come as soon as June, according to the CME Group’s FedWatch tool.

Such expectations will be put to the test this week with a raft of Fed policymakers, including Chair Jerome Powell due to speak in the coming days.

Other speakers include voting members such as Federal Reserve Board Governor Lisa Cook, New York Fed President John Williams and Dallas Fed President Lorie Logan.

The yield on the benchmark ten-year Treasury note, which slid to five-week lows on Friday, edged up to 4.59% on Monday.

Megacap stocks rose in premarket trading, with shares of Tesla (TSLA.O) climbing 2.7% after a source told Reuters the electric automaker plans to build a 25,000-euro ($26,838) car at its factory near Berlin.

The economic-data calendar for this week is light, with weekly jobless claims numbers due on Thursday and University of Michigan’s consumer sentiment report on Friday.

Walt Disney (DIS.N), Instacart (CART.O) and Biogen (BIIB.O) are among major companies reporting earnings this week.

403 companies in the S&P 500 have reported profits to date in the third quarter, with 81.6% surpassing analyst estimates, per LSEG data.

At 5:16 a.m. ET, Dow e-minis were up 28 points, or 0.08%, S&P 500 e-minis were up 8.5 points, or 0.19%, and Nasdaq 100 e-minis were up 41.5 points, or 0.27%.

U.S.-listed shares of Chinese companies Alibaba , PDD Holdings (PDD.O), Bilibili and Baidu were up between 1.4% and 3.6% premarket as Beijing stepped up efforts to stabilise its markets.

Source

Arvinth Akash

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