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US equity futures saw a reversal on Tuesday, bouncing back after an earlier dip, with traders now focusing on the upcoming inflation data due later this week. Both S&P 500 and Nasdaq 100 futures rose by 0.3% and 0.4%, respectively, after falling on Monday as expectations for interest rate cuts were reevaluated. US Treasury yields remained steady around 4%, signaling cautious optimism in the markets.
Market Overview
While US markets showed a potential rebound, European and Asian stocks faced mixed outcomes. The Stoxx Europe 600 fell by 0.6% as Chinese stocks, particularly US-listed shares, dropped sharply following China’s underwhelming economic stimulus announcement. Investors were hoping for stronger support to combat China’s ongoing economic challenges, which ultimately impacted luxury stocks like Kering SA and Burberry.
In premarket trading, Super Micro Computer Inc. saw gains due to strong demand for its servers, and Honeywell’s shares rose following news of a potential spin-off of its advanced materials division.
However, China’s Hang Seng Index plummeted by 9.41%, marking its largest drop in recent memory, driven by profit-taking and uncertainty surrounding the sustainability of recent gains. While the Shanghai Composite surged by 4.59%, reflecting optimism about mainland China’s post-holiday economic recovery, Hong Kong’s market sentiment remained cautious.
Key Economic Indicators to Watch This Week
Traders will be closely watching US consumer inflation data expected to slow to 2.3% year-on-year from 2.5% in the previous reading. With inflation data now carrying greater weight due to the potential impact of hurricanes and strikes on future jobs reports, markets are bracing for any signs of deviation from expectations. The Federal Reserve’s rate decision in November hinges on these economic data points, with a quarter-point rate cut still priced in by year-end.
Major Commodities and Treasury Movements
- Oil: Brent crude fell by 2%, closing at $75.65 a barrel, as global demand concerns weigh on the market.
- Gold: Spot gold gained 0.11% to $2,669, reflecting its safe-haven status amid market uncertainty.
- Treasuries: US 10-year Treasury yields remained largely unchanged at 4.02%, while Germany’s and Britain’s 10-year yields were steady at 2.25% and 4.20%, respectively.
Market Events to Look Forward To
This week is packed with key events that may influence market movements, including:
- Federal Reserve speeches: Insights from Raphael Bostic, Susan Collins, and other Fed officials could provide clarity on future rate movements.
- US CPI data on Thursday: The inflation report is expected to be a major market mover, influencing the Fed’s upcoming decisions.
- Corporate earnings season kicks off: With JPMorgan and Wells Fargo leading the charge on Friday, investors are eager to hear corporate outlooks for 2025 as markets prepare for possible challenges in the global economic landscape.
As traders digest the mixed signals from the markets, all eyes are on inflation data and the Federal Reserve’s next move, as well as any potential surprises in corporate earnings.