Futures Pointing To Roughly Flat Open On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Monday, with stocks likely to show a lack of direction following the strong upward move seen last week.

Traders may be reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is almost universally expected to lower interest rates, but there remains some debate about the size of the rate cut.

CME Group’s FedWatch Tool is currently indicating a 65.0 percent chance of a half point rate cut and a 35.0 percent chance of a quarter point rate cut.

Whether the Fed decides to cut rates by 25 or 50 basis points, the central bank is still expected to continue lowering rates over the remainder of the year.

In U.S. economic news, the Federal Reserve Bank of New York released a report showing regional manufacturing grew for the first time in nearly a year in the month of September.

Stocks moved mostly higher during trading on Friday, extending the upward trend seen over the past several sessions. The Nasdaq and the S&P 500 closed higher for the fifth straight day, largely offsetting the steep losses posted last week.

The major averages all finished the day firmly in positive territory. The Dow advanced 297.01 points or 0.7 percent to 41,393.78, the Nasdaq climbed 114.30 points or 0.7 percent to 17,683.98 and the S&P 500 rose 30.26 points or 0.5 percent to 5,626.02.

For the week, the tech-heavy Nasdaq soared by 6.0 percent, the S&P 500 shot up by 4.0 percent and the Dow surged by 2.6 percent.

Optimism about the outlook for interest rates contributed to the continued strength on Wall Street ahead of the Federal Reserve’s monetary policy meeting.

Adding to the positive sentiment on Wall Street, the University of Michigan released a report showing consumer sentiment in the U.S. has improved by more than anticipated in the month of September.

The University of Michigan said its consumer sentiment index rose to 69.0 in September from 67.9 in August, while economists had expected the index to inch up to 68.0.

The report also showed a continued decrease by year-ahead inflation expectations, which fell for the fourth consecutive month.

Year-ahead inflation expectations edged down to 2.7 percent in September from 2.8 percent in August, hitting the lowest level since December 2020.

The Labor Department also released a report before the start of trading showing import prices in the U.S. decreased by slightly more than expected in the month of August.

Interest rate-sensitive housing stocks moved sharply higher on the day, driving the Philadelphia Housing Sector Index up by 2.8 percent to a record closing high.

Gold stocks also showed a strong move to the upside amid a notable increase by the price of the precious metal, with the NYSE Arca Gold Bugs Index surging by 2.2 percent.

Substantial strength was also visible among steel stocks, as reflected by the 2.1 percent jump by the NYSE Arca Steel Index.

Computer hardware, brokerage and semiconductor stocks also saw significant strength, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are climbing $0.53 to $69.18 a barrel after slipping $0.32 to $68.65 a barrel last Friday. Meanwhile, after surging $30.10 to $2,610.70 an ounce in the previous session, gold futures are edging down $2.30 to $2,608.40 an ounce.

On the currency front, the U.S. dollar is trading at 140.27 yen versus the 140.85 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1120 compared to last Friday’s $1.1075.

Asia

Asian stocks ended mixed on Monday in thin holiday trading, as a slew of Chinese data disappointed and caution prevailed ahead of the Fed, BoJ and BoE policy meetings this week, with central banks in Japan and the U.K. both expected to stand pat on rates.

Upcoming U.S. retail sales and industrial production data also remained on investors’ radar.

Meanwhile, former United States President Donald Trump said he is “safe and well” after another apparent assassination attempt on Sunday.

The dollar weakened, while gold held near record highs as investors assessed the chances of an outsized rate cut move by the Federal Reserve on September 18.

Markets in China, Japan, South Korea and Indonesia were closed for holidays.

Hong Kong’s Hang Seng Index ended 0.3 percent higher at 17,422.12, reversing an early slide after economic data from China over the weekend disappointed.

Chinese industrial production and retail sales grew less than expected in August, home prices fell at the fastest pace in nine years and unemployment rose, adding to concerns over the economic recovery and bolstering the case for additional economic stimulus.

China’s central bank is poised to set its one-year loan prime rate and the five-year rate on Friday.

Australian markets touched a new record high as soaring bullion prices booted gold miners and optimism about a potential interest rate cut by the Federal Reserve lifted banks.

Energy and healthcare stocks lagged, helping limit overall gains in the broader market. The benchmark S&P/ASX 200 Index rose 0.3 percent to 8,121.60, while the broader All Ordinaries Index finished 0.2 percent higher at 8,341.10.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slumped 1.0 percent to 12,704.39.

Europe

European stocks have struggled for direction on Monday as a slew of Chinese data missed expectations.

Chinese industrial production and retail sales grew less than expected in August, home prices fell at the fastest pace in nine years and unemployment rose, adding to concerns over the economic recovery and bolstering the case for additional economic stimulus.

China’s central bank is poised to set its one-year loan prime rate and the five-year rate on Friday.

Investors also shifted focus to a slew of key central bank rate decisions this week, including the Bank of England’s interest rate announcement due on Thursday.

The pound rose to its highest in more than a week and gold prices hovered near record levels as investors raised their bets of a more aggressive Federal Reserve rate cut on Wednesday.

While the German DAX Index is down by 0.3 percent, the French CAC 40 Index is down by 0.1 percent and the U.K.’s FTSE 100 Index is nearly unchanged.

In corporate news, Italian oil and gas major Eni has risen after reports that it is seeking to sell more shares in its renewables arm Plenitude.

Lender UniCredit has also advanced after an announcement that it will start repurchasing as much as €1.7 billion ($1.89 billion) of its own stock.

Playtech has also jumped. The gambling technology firm said it expects 2024 adjusted core profit to be slightly ahead of market expectations.

Ipsen SA has also surged in Paris. The French drug maker has cancelled plans to commercialize a treatment for prostate cancer after a late-stage trial stopped short of reaching its main goals.

Electrical supplies distributor Rexel has also soared after saying it had rejected an unsolicited preliminary bid from billionaire Brad Jacobs-led QXO.

Vossloh AG shares have also climbed. The German rail technology company said that it has secured a contract worth more than 100 million euros for a two-year term from DB InfraGO AG, the Deutsche Bahn AG unit.

On the other hand, British insurer Phoenix Group Holdings has tumbled after dropping the sale process of its SunLife business.

U.S. Economic News

The Federal Reserve Bank of New York released a report on Monday showing regional manufacturing grew for the first time in nearly a year in the month of September.

The New York Fed said its general business conditions index surged to a positive 11.5 in September from a negative 4.7 in August, with a positive reading indicating growth. Economists had expected the index to inch up to a negative 3.9.

The report also said firms grew more optimistic that conditions would improve in the months ahead, as the index for future business activity climbed to 30.6 in September from 22.9 in August.