US Futures Are Muted As European Automakers Slump: Markets Wrap

US equity futures posted small moves after last week’s record highs on Wall Street, with traders already looking forward to key data on the American labor market due Friday and its impact on Federal Reserve interest-rate cuts.

S&P 500 and Nasdaq 100 contracts were steady. US-listed Chinese stocks rallied in premarket trading after the latest steps by authorities to boost the economy. Treasury yields climbed, led by the policy-sensitive two-year note. The dollar was little changed.

Europe’s Stoxx 600 index slid 0.8%, paced by declines in automakers as Jeep maker Stellantis NV cut its profit margin forecast. Volkswagen AG on Friday issued its second profit warning in three months.

That was in contrast to the mood in China, where the CSI 300 Index jumped as much as 9.1%, the most since 2008, fueled by the stimulus package. The policy steps also buoyed European mining and luxury stocks.

“Right now, we see an improvement in sentiment, which is driven by more stringent action that we see in China — that is good news for the European equity markets,” Marcus Poppe, co-head of European equities at DWS Investment, said in an interview with Bloomberg TV. “But I would caution against expecting that we will see in three-four weeks companies saying: ‘China is picking up.’”

Last week, US data bolstered bets for further interest-rate cuts by the Federal Reserve and investors will be tuning in for remarks by Fed Chair Jerome Powell on Monday when he takes the stage at a National Association for Business Economics conference.

Further out, the US jobs print on Friday could decide whether last week’s risk—on rally can extend. A strong reading might lead to a rotation toward stocks with weaker earnings, according to Goldman Sachs Group Inc. strategists.

A positive report may prompt some investors to “price lower odds of substantial labor market weakening,” leading them to “rotate out of expensive ‘quality’ stocks into less-loved lower quality firms,” the team led by David Kostin wrote.

As they prepare for the US data to gauge the outlook for Fed rate cuts, investors must also ponder a cocktail of risks, including rising tensions in the Middle East. The record-setting rally in stocks will also be tested by third-quarter corporate results set to kick off in mid-October.

Political developments in Europe provide an additional layer of complexity. Austria’s traditional political powers are pledging to block the far-right Freedom Party from forming a government following Sunday’s national elections that resulted in its historic victory.

In commodities, oil steadied as the market studied the outlook from Israel’s killing of Hezbollah leader Hassan Nasrallah in Beirut, and China’s stimulus moves.

Key events this week:

• Fed Chair Jerome Powell delivers speech at National Association for Business Economics conference in Nashville on Monday
• European Central Bank President Christine Lagarde speaks at EU Parliament monetary dialogue on Monday
• Bank of England policy maker Megan Greene joins panel at NABE to discuss global monetary policy on Monday
• Atlanta Fed President Raphael Bostic, Fed Governor Lisa Cook, Richmond Fed President Thomas Barkin and Boston Fed President Susan Collins attend conference on Tuesday
• ECB policy makers speaking at various locations include Olli Rehn, Luis de Guindos, Isabel Schnabel and Joachim Nagel on Tuesday
• BOE chief economist Huw Pill speaks at Confederation of British Industry economic growth board on Tuesday
• Bank of Japan issues summary of opinions for September on Tuesday
• South Korea CPI, S&P Global Manufacturing PMI on Wednesday
• Fed speakers include Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem and Fed Governor Michelle Bowman on Wednesday
• US nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 7:18 a.m. New York time
• Nasdaq 100 futures fell 0.3%
• Futures on the Dow Jones Industrial Average fell 0.1%
• The Stoxx Europe 600 fell 1%
• The MSCI World Index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.3% to $1.1192
• The British pound rose 0.3% to $1.3408
• The Japanese yen fell 0.2% to 142.51 per dollar

Cryptocurrencies

• Bitcoin fell 3.3% to $63,636.11
• Ether fell 1.8% to $2,612.59

Bonds

• The yield on 10-year Treasuries advanced two basis points to 3.77%
• Germany’s 10-year yield was little changed at 2.14%
• Britain’s 10-year yield advanced two basis points to 4.00%

Commodities

• West Texas Intermediate crude fell 0.3% to $67.96 a barrel
• Spot gold fell 0.7% to $2,638.83 an ounce

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