Futures Pointing To Continued Weakness On Wall Street

The major U.S. index futures are currently pointing to a lower open on Monday, with stocks likely to see further downside following the notable downturn seen over the course of last Friday’s session.

Uncertainty about the outlook for interest rates may weigh on the markets ahead of the release of key inflation data in the coming days.

The Labor Department is scheduled to release its closely watched report on consumer price inflation in the month of February on Tuesday.

Economists currently expect consumer prices to climb by 0.4 percent in February after rising by 0.3 percent in January.

Core consumer prices, which exclude food and energy prices, are expected to rise by 0.3 percent in February following a 0.4 percent increase in January.

Meanwhile, the annual rate of consumer price growth is expected to come in unchanged from the previous month at 3.1 percent, while annual core consumer price growth is expected to slow to 3.7 percent from 3.9 percent.

The consumer price inflation data could have a significant impact on the outlook for interest rates, with Federal Reserve officials saying they need “greater confidence” inflation is slowing before they consider cutting rates.

While the Fed is widely expected to leave rates unchanged at its monetary policy meeting next week, the data could impact expectations regarding when the central bank will eventually lower rates.

On Thursday, the Labor Department is due to release a separate report on producer price inflation in the month of February.

Producer prices are expected to rise by 0.3 percent in February, matching the increase seen in January, while the annual rate of producer price growth is expected to accelerate to 1.2 percent from 0 .9 percent.

Reports on retail sales, industrial production and consumer sentiment are also likely to attract attention in the coming days.

Stocks moved mostly higher in early trading on Friday but showed a notable downturn over the course of the session. The major averages pulled back well off their early highs, with the tech-heavy Nasdaq showing a particularly steep drop.

The major averages staged a failed recovery attempt in the latter part of the session, ending the day firmly in the red. The Nasdaq tumbled 188.26 points or 1.2 percent to 16,085.11, the S&P 500 slid 33.67 points or 0.7 percent to 5,123.69 and the Dow dipped 68.66 points or 0.2 percent to 38,722.69.

With the downturn on the day, the major averages all moved lower for the week. The Nasdaq slumped by 1.2 percent, the Dow fell by 0.9 percent and the S&P 500 slipped by 0.3 percent.

The early strength on Wall Street came as the Labor Department’s closely watched monthly jobs report added to optimism about the outlook for interest rates.

While job growth in February came in much stronger than expected, the report also showed notable downward revisions to job growth in the two previous months.

The Labor Department said non-farm payroll employment surged by 275,000 jobs in February, while economists had expected employment to jump by 200,000 jobs.

However, the report also said job growth in December and January was downwardly revised to 290,000 and 229,000 jobs, respectively, reflecting a net downward revision of 167,000 jobs.

The Labor Department also said the unemployment rate rose to 3.9 percent in February from 3.7 percent in January. Economists had expected the unemployment rate to come in unchanged.

The downward revisions and the unexpected increase in the unemployment rate combined with a slowdown in the annual rate of wage growth has added to optimism the Federal Reserve will begin lowering interest rates in June.

Buying interest remained somewhat subdued, however, as traders seemed reluctant to continue buying stocks ahead of the release of key inflation data next week that could have a more profound impact on the outlook for rates.

The subsequent downturn by the markets partly reflected profit taking, with the Nasdaq and S&P 500 coming under pressure after reaching new record intraday highs.

AI darling Nvidia (NVDA) showed a significant downturn on the day, plunging by 5.6 percent after surging by 5.1 percent to a record high in early trading.

Semiconductor stocks helped lead the downturn on the day after helping to lead the markets higher on Thursday, with the Philadelphia Semiconductor Index plummeting by 4.0 percent.

Considerable weakness also emerged among retail stocks, as reflected by the 1.2 percent loss posted by the Dow Jones U.S. Retail Index.

Airline, computer hardware and networking stocks also came under pressure as the day has progressed, while strength remained visible among commercial real estate stocks.

Commodity, Currency Markets

Crude oil futures are slipping $0.31 to $77.70 a barrel after sliding $0.92 to $78.01 a barrel last Friday. Meanwhile, after jumping $20.30 to $2,185.50 an ounce in the previous session, gold futures are inching up $0.50 to $2,186 an ounce.

On the currency front, the U.S. dollar is trading at 146.83 yen versus the 147.06 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0934 compared to last Friday’s $1.0939.

Asia

Asian stocks turned in a mixed performance on Monday after the latest U.S. jobs report sent mixed signals about the state of the world’s largest economy.

While a stronger yen pressured Japanese stocks, encouraging inflation data helped spur buying in mainland China and Hong Kong.

A weaker dollar helped lift gold prices to another record high, while oil extended last week’s losses on Chinese demand concerns.

China’s Shanghai Composite Index climbed 0.7 percent to 3,068.46 as weekend data showed consumer prices in the country rose for the first time since August.

The country’s consumer price index climbed an annual 0.7 percent in February, exceeding economists’ forecast and easing worries about deflation in the world’s second largest economy.

However, the producer price index fell 2.7 percent from a year earlier versus a 2.5 percent drop the previous month.

Hong Kong’s Hang Seng Index rallied 1.4 percent to 16,587.57 after reports suggested financial institutions may shore up support for state-backed property developer China Vanke.

Japanese markets tumbled, led by selling in semiconductor stocks. A stronger yen also pressured stocks after revised data showed the country averted a technical recession, paving the way for Bank of Japan to raise interest rates at its upcoming policy meeting next week.

Bond yields gained after a report stating that the BOJ is considering scrapping its yield curve control program.

The Nikkei 225 Index plunged 2.2 percent to 38,820.49 after having surpassed the key 40,000 level last week for the first time. The broader Topix Index settled 2.2 percent lower at 2,666.83.

Among the prominent decliners, Toyota Motor shed 3.1 percent, Advantest lost 4.8 percent and SoftBank plummeted 6 percent.

Seoul stocks fell notably after a recent string of strong gains. The Kospi dropped 0.8 percent to 2,659.84, dragged down by semiconductor stocks. Samsung Electronics gave up 1.2 percent and SK Hynix declined 3.1 percent.

Australian markets slumped, with heavyweight mining, banking and energy stocks leading losses. The benchmark S&P/ASX 200 Index slumped 1.8 percent to 7,704.20, retreating from a record high and snapping a three-day winning streak ahead of the RBA’s monetary policy meeting next week.

The broader All Ordinaries Index closed down 1.8 percent at 7,963.60.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index fell 0.4 percent to 11,873.67.

Europe

European stocks have declined on Monday amid much uncertainty about the outlook for interest rates. After February U.S. payroll figures exceeded expectations, investors now look ahead to the release of key U.S. consumer and producer price data this week for further direction.

Closer to home, investors are increasingly confident the European Central Bank (ECB) may lead global peers with a rate cut in June.

While the German DAX Index has slid by 0.7 percent, the U.K.’s FTSE 100 Index is down by 0.6 percent and the French CAC 40 Index is down by 0.4 percent.

Tech stocks have led the losses, with Infineon Technologies and ASM International both moving notably lower due to profit taking after recent strong gains. Miners have also retreated on growth concerns.

British electronics retailer Currys has plunged after Elliott Investment Management said it had decided not to make a takeover bid for the company.

British Land has also moved to the downside after the commercial property firm appointed William Rucker as chair designate.

On the other hand, tobacco giant Imperial Brands has rallied after announcing a £1.1 billion share repurchase program.

Shares of German meal kit giant HelloFresh have also surged after having plunged over 40 percent in the previous session following an earnings warning.

Italian energy producer Enel S.p.A. has also advanced after its subsidiary E-distribuzione agreed to sell some of its distribution activities to Italian utility A2A for about 1.2 billion euros ($1.3 billion).

Marston’s has also moved to the upside as the chair of the brewing and pub giant confirmed his intention to step down later this year.

U.S. Economic Reports

The Treasury Department is scheduled to announce the results of this month’s auction of $56 billion worth of three-year notes at 1 pm ET.