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 rally seen in the previous week.

Traders may be reluctant to make significant moves following recent volatility in the markets, which saw the markets fall sharply early this month before showing a substantial rebound over the past several sessions.

The U.S. economic calendar also starts the week relatively quiet following last week’s avalanche of data, although key events are likely to attract attention later in the week

The minutes of the Federal Reserve’s latest monetary policy meeting may shed additional light on the outlook for interest rates along with remarks by Fed Chair Jerome Powell and other Fed officials at the Jackson Hole Economic Symposium.

According to CME Group’s FedWatch Tool, there is a 73.5 percent of a quarter point rate cut next month and a 26.5 percent chance of a half point rate cut.

Among individual stocks, shares of Advanced Micro Devices (AMD) are moving notably higher in pre-market trading after the chipmaker announced an agreement to acquire server maker ZT Systems in a cash and stock transaction valued at $4.9 billion.

After showing a lack of direction early in the session, stocks moved mostly higher over the course of the trading day on Friday. The major averages climbed more firmly into positive territory after bouncing back and forth across the unchanged line in early trading.

The major averages pulled back off their best levels late in the day but still closed modestly higher. The Dow climbed 96.70 points or 0.2 percent to 40,659.76, the Nasdaq rose 37.22 points or 0.2 percent to 17,631.72 and the S&P 500 edged up 11.03 points or 0.2 percent to 5,554.25.

For the week, the Nasdaq soared by 5.3 percent, the S&P 500 spiked by 3.9 percent and the Dow surged by 2.9 percent.

The strength that has emerged on Wall Street may have reflected recent upward momentum, with the major averages extending the upward trend seen over the past several sessions.

The Nasdaq and the S&P 500 closed higher for the seventh consecutive session and more than offset the steep drop seen early this month.

The buying interest also came as recent data has eased concerns about the economic outlook while also increasing confidence the Federal Reserve will cut interest rates next month.

While yesterday’s upbeat retail sales data has reduced the likelihood of a 50 basis point rate cut, the Fed is still widely expected to cut rates by at least 25 basis points.

In U.S. economic news, preliminary data released by the University of Michigan showed consumer sentiment in the U.S. has improved by more than expected in the month of August.

The University of Michigan said its consumer sentiment index rose to 67.8 in August after falling to 66.4 in July. Economists had expected the index to inch up to 66.9.

The consumer sentiment index regained ground after hitting its lowest level since November 2023 in the previous month.

On the inflation front, the report said year-ahead and long-term inflation expectations were both unchanged from the previous month at 2.9 percent and 3.0 percent, respectively.

Meanwhile, the Commerce Department released a report showing a sharp pullback by new residential construction in the month of July.

The report said housing starts plunged by 6.8 percent to an annual rate of 1.238 million in July after jumping by 1.1 percent to a revised rate of 1.329 million in June.

Economists had expected housing starts to slump by 1.7 percent to an annual rate of 1.330 million from the 1.353 million originally reported for the previous month.

With the sharp pullback, housing starts tumbled to their lowest level since hitting an annual rate of 1.053 million in May 2020.

The Commerce Department said building permits also plummeted by 7.0 percent to an annual rate of 1.396 million in July after surging by 3.9 percent to a revised rate of 1.454 million in June.

Building permits, an indicator of future housing demand, were expected to decrease by 1.1 percent to an annual rate of 1.430 million from the 1.446 million originally reported for the previous month.

Gold stocks moved significantly higher over the course of the session, resulting in a 3.0 percent surge by the NYSE Arca Gold Bugs Index. The rally by gold stocks came amid a sharp increase by the price of the precious metal.

Considerable strength also emerged among telecom stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca North American telecom Index.

Banking and networking stocks also saw notable strength on the day, while airline stocks gave back ground after soaring during Thursday’s session.

Commodity, Currency Markets

Crude oil futures are sliding $0.77 to $75.88 a barrel after tumbling $1.51 to $76.65 a barrel last Friday. Meanwhile, after surging $45.40 to $2,537.80 an ounce in the previous session, gold futures are slipping $5.40 to $2,532.40 an ounce.

On the currency front, the U.S. dollar is trading at 146.15 yen versus the 147.63 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1036 compared to last Friday’s $1.1027.

Asia

Asian stocks turned in a mixed performance on Monday, as investors awaited cues from the FOMC meeting minutes along with speeches by Fed Chair Jerome Powell and other Fed speakers this week for additional clues on the interest rate trajectory.

The dollar began the week on a weak note after a couple of Fed officials said its time to adjust borrowing costs. Oil and gold prices fell slightly in Asian trading, as the U.S. pushed for a deal between Israel and Hamas to end the war in Gaza, calling it “maybe the last opportunity to get the hostages home.”

China’s Shanghai Composite Index rose 0.5 percent to 2,893.67 ahead of Tuesday’s interest rate decision by China’s central bank. Hong Kong’s Hang Seng Index climbed 0.8 percent to 17,569.57.

Japanese markets tumbled on profit taking after last week’s rally. The Nikkei 225 Index slumped 1.8 percent to 37,388.62, snapping a five-day winning streak as the yen strengthened on dovish Fed expectations.

The broader Topix Index settled 1.4 percent lower at 2,641.14 ahead of the release of Japanese inflation data due this week. Investors ignored data that showed Japan’s core machinery orders rose more than expected in June compared to month ago.

Automakers Honda, Nissan, Mitsubishi and Toyota dropped 1-3 percent. Retailer Seven & I Holdings surged 22.7 percent after receiving a takeover bid.

Seoul stocks fell notably, with the Kospi ending down 0.9 percent at 2,674.36, as investors cashed in profits following recent gains.

Australian markets edged up slightly as banks and gold stocks advanced, offsetting losses in the mining sector. The benchmark S&P/ASX 200 Index inched up 0.1 percent to 7,980.40, while the broader All Ordinaries Index finished marginally higher at 8,194.80.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index dipped 0.5 percent to 12,662.11. Dairy firm a2 Milk plummeted 18.9 percent to hit a four-month low after releasing its FY24 result and downgrading guidance.

Europe

European stocks have struggled for direction on Monday after gaining for four days in a row on optimism over potential U.S. rate cuts.

While the French CAC 40 Index is up by 0.5 percent, the German DAX Index is up by 0.3 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.

Aerospace and defense stocks edged lower after reports suggested that Germany, the second largest contributor of aid to Ukraine, plans to halve its military aid to Kyiv in 2025 due to spending cuts. BAE Systems, Rolls-Royce Holdings, Rheinmetall and Saab AB have all moved notably lower.

Meanwhile, Plus500 has surged after the online trading platform announced a strong set of interim results and forecast its annual results to be above market view.

British housebuilder Barratt Developments and rival Redrow have also moved to the upside. The two companies announced in a joint statement that a merger deal between them would be completed later this week.

U.S. Economic News

Federal Reserve Board Governor Christopher Waller is due to give opening remarks before the Summer Workshop on Money, Banking, Payments, and Finance hosted by the Federal Reserve Board of Governors at 9:15 am ET.

At 10 am ET, the Conference Board is scheduled to release its report on leading economic indicators in the month of July. The leading economic index is expected decrease by 0.3 percent in July after dipping by 0.2 percent in June.