U.S. index futures dropped in pre-market trading on Tuesday, reflecting investor caution ahead of upcoming economic reports and a potential interest rate decision.
At 5:04 AM, Dow Jones futures (DOWI:DJI) fell 54 points, or 0.13%. S&P 500 futures lost 0.18%, and Nasdaq-100 futures dropped 0.39%. The 10-year Treasury yield stood at 3.708%.
In today’s U.S. economic agenda, the NFIB optimism index for August will be released at 6 AM. The forecast is 93.6, slightly down from the previous 93.7.
In the commodities market, prices dropped due to weak demand from China, which outweighed the impact of supply disruptions caused by Tropical Storm Francine. Despite production halts by Exxon Mobil, Shell, and Chevron, oversupply and low Chinese demand pressured prices.
West Texas Intermediate crude for October fell 1.19% to $67.90 per barrel, while Brent for November dropped 1.06% to $71.08 per barrel.
The platinum market (CCOM:PLATINUM) is facing its largest annual deficit in a decade, estimated at over 1 million ounces in 2024, due to rising demand and ETF investments. However, platinum prices have reacted slowly, falling 30% since 2021, while supply is expected to decrease by 2% and demand to rise.
Gold (PM:XAUUSD) fell 0.24%, trading at $2,501.45 per ounce, as investors await U.S. inflation data to assess potential Federal Reserve rate cuts. Gold has risen about 30% in the past 12 months, driven by central bank purchases, rate cut expectations, and safe-haven demand amid Middle East and Ukraine conflicts.
Asia-Pacific markets showed mixed results on Tuesday. Australia’s S&P/ASX 200 rose 0.3%, while Japan’s Nikkei 225 fell 0.16%. South Korea’s Kospi dropped 0.49%, and Hong Kong’s Hang Seng gained 0.37% in late trading.
In China, the CSI 300 closed nearly flat. The continued sell-off of Chinese stocks is deepening the country’s economic confidence crisis, pressuring policymakers to act. The CSI 300 faces its fourth consecutive annual decline, and government efforts to support the market have been insufficient. The real estate crisis and geopolitical tensions exacerbate the situation, with few signs of economic recovery.
In August, Chinese exports grew by 8.7%, the biggest increase since March 2023, driven by fears of new tariffs. However, imports grew only 0.5%, below forecasts, reflecting weak domestic demand. China faces challenges balancing economic growth with its reliance on exports amidst trade barriers.
In Australia, business conditions in August fell to their lowest level in two and a half years, impacting employment outlooks. The NAB business conditions index dropped to +3, and the business confidence index to -4. Inflation remains high, and the Reserve Bank of Australia is not expected to cut rates this year.
European markets were mixed on Tuesday. The technology sector gained, while healthcare dipped, weighed down by AstraZeneca (LSE:AZN) shares following disappointing lung cancer trial results.
In Germany, August inflation fell to 2.0%, the lowest level in three years, due to declining energy prices. Core inflation slowed to 2.8% from 2.9% the previous month. However, food prices rose for the fifth consecutive month by 1.5%, and service prices increased by 3.9% year-over-year.
Germany’s chemical sector saw its recovery lose steam in the second quarter, with production growth of just 0.8%, down from 5% earlier in the year. The slowdown is attributed to weak demand, high costs, and ongoing structural problems. Pharmaceutical production fell 4% during the quarter.
In the UK, wage growth fell to its lowest level in two years, rising just 5.1% in the three months to July. This decline in wage pressures reinforces expectations of further interest rate cuts by the Bank of England later this year. Unemployment dropped to 4.1% between May and July 2024. Investors are also awaiting Italy’s industrial production data.
Schroders Plc (LSE:SDR) shares rose 0.2% after announcing that current CFO Richard Oldfield would become the new CEO, replacing Peter Harrison starting November 8, subject to regulatory approval. Oldfield, who joined the company last year, has over 20 years of experience at PwC. The company is searching for a new CFO after Harrison’s retirement.
On Monday, major U.S. indexes recovered after the previous week’s drop. The Dow Jones gained 1.20%, the S&P 500 rose 1.16%, and the Nasdaq advanced 1.16%. Optimism about potential Federal Reserve rate cuts provided a boost, with sectors like airlines and semiconductors standing out.
Before the market opens, companies reporting quarterly earnings include Academy Sports (NASDAQ:ASO), Cognyte Software (NASDAQ:CGNT), Comerica (NYSE:CMA), Bioceres Crop Solutions (NASDAQ:BIOX), Dynagas LNG (NYSE:DLNG).
After the market closes, earnings from GameStop (NYSE:GME), Dave & Buster’s (NASDAQ:PLAY), Petco (NASDAQ:WOOF), Cantaloupe (NASDAQ:CTLP), Mama’s Creations (NASDAQ:MAMA), InnovAge (NASDAQ:INNV), and Evolution Petroleum (AMEX:EPM) are expected.