US Futures Signal Steady Open With Focus on Data: Markets Wrap

(Bloomberg) — US stocks were set for a steady open after days of volatility as uncertainty persists over the health of the American economy and the pace of possible Federal Reserve interest-rate cuts.

S&P 500 futures were little changed as Nvidia Corp. and Tesla Inc. rose in premarket trading. Europe’s Stoxx 600 index dropped 0.3%, with luxury stocks such as LVMH among the biggest losers. Asian equities erased most gains after declines in Hong Kong and Japan.

Traders are looking to weekly jobless claims data due later today and Friday’s nonfarm payrolls reports to assess whether the US economy is heading for a soft-landing as the Fed prepares to start easing policy. Global stocks suffered their worst losses earlier this week since the Aug. 5 meltdown, with the Cboe Volatility Index remaining elevated at 20.

Swap traders have ramped up bets on the pace of rate cuts after a Wednesday reading on US job openings trailed estimates and the Fed’s Beige Book survey showed flat or declining economic activity. Rates pricing foresees at least 100 basis points of easing this year, including one jumbo cut of 50 basis points.

“We think that the US soft landing scenario is intact but acknowledge that the next two-three months could be a tricky period,” Eddy Loh, chief investment officer at Maybank Group Wealth Management, said on Bloomberg Television. “If the Fed were to cut 50 basis points, the market could perceive it as a negative because that means the Fed is seeing something in the economy.”

The yield on two-year Treasuries advanced two basis points after tumbling Wednesday on the data showing a slowdown in the US labor market. The dollar edged lower.

US interest rates will settle in a range of between 3% and 4%, according to Oaktree Capital Management LP’s Howard Marks.

“The Fed will back off from the emergency rate of five and a quarter, five and a half and get down into the threes,” Marks, the co-chairman and co-founder of Oaktree said at a conference in Melbourne Thursday. “But my point to you, my belief is that we’re going to stay there in the threes and we’re not going back to zero or a half or one.”

Iron ore slumped to its lowest level since 2022 and traded near $90 a ton as China’s main steel industry group advised mills to be cautious in boosting output too quickly to avoid snuffing out a post-summer recovery. 

Brent futures were heading for the first day of gains in five, with OPEC+ getting closer to an agreement on delaying an increase in oil production. West Texas Intermediate traded below $70 a barrel.

Corporate Highlights:

• Verizon Communications Inc. agreed to buy rival telecommunications operator Frontier Communications Parent Inc. for an enterprise value of $20 billion.
• Tiffany & Co., LVMH’s leading jewelry maker, is planning to downsize a flagship store of more than 12,000 square feet in Shanghai.
• Seven & i Holdings Co. plans to tell Alimentation Couche-Tard Inc. that its offer price for the Japanese convenience store operator is “insufficient,” Japan’s Nikkei newspaper reported.
• Nvidia, responding to a Bloomberg News report about the US Department of Justice sending out subpoenas as part of an antitrust probe, said it has been in contact with the government agency but hasn’t been subpoenaed.
• Volvo Car AB scaled back its outlook as rising tariffs hurt some of its models made in China, a day after abandoning a target to only sell electric cars by 2030.

Key events this week:

• US initial jobless claims, ADP employment, ISM services index, Thursday
• Eurozone GDP, Friday
• US nonfarm payrolls, Friday
• Fed’s John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 7:10 a.m. New York time
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average were little changed
• The Stoxx Europe 600 fell 0.3%
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.2% to $1.1100
• The British pound rose 0.2% to $1.3168
• The Japanese yen rose 0.2% to 143.46 per dollar

Cryptocurrencies

• Bitcoin fell 2.3% to $56,700.44
• Ether fell 2.7% to $2,388.96

Bonds

• The yield on 10-year Treasuries advanced one basis point to 3.77%
• Germany’s 10-year yield was little changed at 2.23%
• Britain’s 10-year yield was little changed at 3.94%

Commodities

• West Texas Intermediate crude rose 0.6% to $69.63 a barrel
• Spot gold rose 0.8% to $2,515.50 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Chiranjivi Chakraborty.

©2024 Bloomberg L.P.