Futures Pointing To Modestly Lower Open On Wall Street

The major U.S. index futures are currently pointing to a modestly lower open on Monday, with stocks likely to give back ground following the rally seen last Friday.

Traders may look to cash in on the strong upward move seen in the previous session, which lifted the tech-heavy Nasdaq to a nearly two-month closing high.

The Dow and the S&P 500 also surged to their best closing levels in well over a month, more than offsetting the pullback seen on Thursday.

Negative sentiment may be generated in reaction to news credit rating agency Moody’s has lowered its outlook for the U.S.’ credit rating to negative from stable.

Moody’s reaffirmed the U.S. credit rating at Aaa but said it “expects that the U.S.’ fiscal deficits will remain very large, significantly weakening debt affordability.”

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of key inflation data in the coming days.

The inflation data could have a significant impact on the outlook for interest rates, with traders recently expressing optimism the Federal Reserve is done raising rates.

Following the sharp pullback seen Thursday afternoon, stocks showed a substantial move back to the upside during trading on Friday. The Nasdaq surged to a nearly two-month closing high, while the Dow and the S&P 500 reached their best closing levels in well over a month.

The major averages saw further upside going into the close, ending the session near their best levels of the day. The Nasdaq soared 276.66 points or 2.1 percent to 13,798.11, the S&P 500 spiked 67.89 points or 1.6 percent to 4,415.24 and the Dow jumped 391.16 points or 1.2 percent to 34,283.10.

For the week, the Nasdaq shot up by 2.4 percent, the S&P 500 advanced by 1.3 percent and the Dow climbed by 0.7 percent.

The rally on Wall Street came as traders shrugged off concerns about the outlook for interest rates sparked by remarks by Federal Reserve Chair Jerome Powell on Thursday.

Powell said the Fed is not yet confident rates are at a sufficiently restrictive level to bring inflation down to 2 percent and warned the central bank would not hesitate to resume raising rates.

Despite Powell’s comments, CME Group’s FedWatch Tool currently still suggests the Fed is likely to leave interest rates over the next several months before cutting rates in mid-2024.

Stocks initially benefited from a pullback by treasury yields, which surged in afternoon trading on Thursday following a disappointing thirty-year bond auction as well as Powell’s comments.

However, the major averages continued to advance over the course of the session even though yields rebounded.

On the U.S. economic front, the University of Michigan said its consumer sentiment index slid to 60.4 in November from 63.8 in October. Economists had expected the index to edge down to 63.7.

The consumer sentiment index decreased for the fourth consecutive month, falling to its lowest level since hitting 59.0 in May.

The report also said year-ahead inflation expectations rose to 4.4 percent in November from 4.2 percent in October, reaching the highest level since hitting 4.7 percent in April.

Long-run inflation expectations also increased from 3.0 percent in October to 3.2 percent in November, marking the highest reading since 2011.

Semiconductor stocks moved sharply higher over the course of the session, resulting in a 4.0 percent spike by the Philadelphia Semiconductor Index.

Significant strength was also visible among software stocks, with the Dow Jones U.S. Software Index surging by 2.5 percent to its best intraday level in well over a year.

Housing stocks also showed a strong move to the upside on the day, driving the Philadelphia Housing Sector Index up by 1.8 percent.

Retail, computer hardware, networking and energy stocks also saw notable strength, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are inching up $0.01 to $77.18 a barrel after jumping $1.43 to $77.17 a barrel last Friday. Meanwhile, after plunging $32.10 to $1,942.70 an ounce in the previous session, gold futures are edging up $3.90 to $1,941.60 an ounce.

On the currency front, the U.S. dollar is trading at 151.82 yen versus the 151.52 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.2235 compared to last Friday’s $1.0686.

Asia

Asian stocks turned in a mixed performance on Monday amid interest rate uncertainty and concerns over a possible government shutdown in the U.S.

The dollar and Treasuries gained ahead of crucial U.S. inflation data due this week, while gold struggled to gain after falling by the most in more than a month last week. Oil prices traded lower in Asian trade after rising sharply on Friday. Markets were closed in Singapore and Malaysia for a holiday.

China’s Shanghai Composite Index rose 0.3 percent to 3,046.53 on optimism over an upcoming summit between U.S. President Joe Biden and his Chinese counterpart Xi Jinping in San Francisco this week.

Hong Kong’s Hang Seng Index jumped 1.3 percent close at 17,426.21. JD.com rallied 1.8 percent and Alibaba Group Holding added 1.3 percent after reporting a pickup in sales for Singles’ Day.

Japanese shares gave up early gains to end on a flat note as data showed producer price inflation in the country fell sharply in October to hit a two-year low.

The Nikkei 225 Index finished marginally higher at 32,585.11 after rising more than 1 percent in early trading. The broader Topix ndex settled with a negative bias at 2,336.62.

Cosmetics maker Shiseido plunged 14.3 percent after slashing its annual profit forecast. Chip-related stocks followed their U.S. peers higher, with Advantest, Tokyo Electron and Screen Holdings gaining between 1.3 percent and 1.7 percent.

Education service provider Benesse Holdings soared 20.5 percent after announcing it will go private through a management buyout scheme.

Seoul stocks edged lower as positive exports data was offset by concerns of a potential U.S. government shutdown following a cut in Moody’s rating outlook for the United States. The Kospi slipped 0.2 percent to 2,403.76.

Australian markets closed lower, dragged down by financials and gold miners. The benchmark S&P/ASX 200 Index dropped 0.4 percent to 6,948.80 as investors fretted about further upside surprises to domestic inflation. The broader All Ordinaries Index settled 0.4 percent lower at 7,145.

Lender ANZ Group Holdings tumbled 3 percent after its annual profit fell short of market forecasts. TPG Telecom slumped 11.7 percent after ending talks with Vocus Group for the sale of some of its non-mobile fibre assets.

Europe

European stocks have advanced on Monday as investors look ahead to inflation data from the U.S and Eurozone for further clarity on the outlook for rates.

ECB Vice President Luis de Guindos said the labor market is beginning to weaken and the central bank will be in a better position to reassess the inflation outlook in December.

A China-U.S. summit meeting to be held on the sidelines of the APEC meetings also remains on investors’ radar. Media reports suggest that Beijing is considering ending a freeze on Boeing’s aircraft.

Meanwhile, markets ignored Moody’s decision to lower its outlook on the U.S. credit rating to “negative” from “stable.”

While the U.K.’s FTSE 100 Index has climbed by 0.6 percent, the French CAC 40 Index is up by 0.4 percent and the German DAX Index is up by 0.3 percent.

Danish pharmaceutical company Nordisk has rallied after a trial showed its weight-loss drug Wegovy cut the risk of death by 18 percent.

Phoenix Group shares have also moved sharply higher in London after the insurer lifted its full-year cash generation targets.

Tullow Oil has also soared. The company has entered into a $400 million five-year notes facility agreement with Glencore Energy U.K. Limited.

Drug maker GSK has also jumped after receiving a positive CHMP opinion for its oral therapy to treat anaemia in patients with a type of bone marrow cancer called myelofibrosis.

Real estate group British Land Company has also shown a significant move to the upside posting solid first-half results.

On the other hand, Technip Energies NV has moved notably lower in Paris after Barclays downgraded its rating on the stock.

German IT company Q.Beyond AG has also moved to the downside after reporting a wider loss for the first nine months of the year.

U.S. Economic Reports

No major U.S. economic data is scheduled to be released today.