U.S. index futures are mixed in Tuesday’s pre-market, following record closes for the S&P 500 and Dow Jones on the previous day. Focus is on major bank earnings, economic data on manufacturing and consumption, and comments from Federal Reserve members.
At 5:01 AM ET, Dow Jones futures rose by 69 points, or 0.16%. S&P 500 futures lost 0.04%, and Nasdaq-100 futures fell by 0.16%. The 10-year Treasury yield stood at 4.073%.
In the commodities market, oil prices dropped after Israel’s statement about targeting only Iranian military assets, easing supply concerns. Uncertainty over China’s stimulus measures also affected markets.
Citi Research revised its optimistic oil price forecast to $120 per barrel in Q4 2024 and Q1 2025, driven by the escalating conflict in the Middle East. However, it maintained its base forecast at $74 and $65 due to weak market fundamentals. In a pessimistic scenario, it predicts OPEC+ will increase production in December, reducing supply risks, potentially driving prices to $60 and $55, with a 20% chance.
OPEC revised its 2024 global oil demand growth forecast downwards, now estimating an increase of 1.93 million barrels per day (bpd), compared to a previous estimate of 2.03 million bpd. China’s demand was revised from 650,000 bpd to 580,000 bpd. OPEC+ plans to increase production in December after delays caused by falling oil prices.
West Texas Intermediate crude for November fell by 4.59% to $70.44 per barrel, while Brent for December dropped by 4.43% to $74.03 per barrel.
Iron ore prices dropped in Singapore as investors shifted focus to increasing supply, with mining giants like BHP (NYSE:BHP), Rio Tinto (NYSE:RIO), and Vale (NYSE:VALE)reporting production updates.
Gold prices are up after a slight drop due to comments from a Federal Reserve member suggesting a slower pace of interest rate cuts. Demand for safe-haven assets has declined as concerns about Middle Eastern conflicts eased. Gold (PM:XAUUSD) rose by 0.2% to $2,653.77 per ounce.
On today’s U.S. economic agenda, the October Empire State Manufacturing Survey will be released at 8:30 AM ET, with a median forecast of 0.5, down from 11.5. Additionally, Federal Reserve Governor Adriana Kugler will speak at 1:00 PM ET. San Francisco Fed President Mary Daly and Atlanta Fed President Raphael Bostic will also provide remarks throughout the day.
Asia-Pacific markets closed mixed. China’s CSI 300 fell by 2.66%, erasing Monday’s gains. Hong Kong’s Hang Seng dropped nearly 4% in the final hour of trading. In South Korea, the Kospi rose by 0.39%, while the Kosdaq gained 0.4%. Japan’s Nikkei 225 increased by 0.77%, and the Topix rose by 0.64%. Australia’s S&P/ASX 200 added 0.79%.
China reported disappointing trade data for September, with exports up 2.4% and imports rising 0.3%, both below expectations. China may issue up to $846 billion (6 trillion yuan) in bonds over three years to stimulate its economy, though the plan lacks specifics. South Korea confirmed a trade surplus of $6.7 billion, up from $3.7 billion in August.
In Singapore, new home sales surged in September, driven by increased supply and lower U.S. interest rates. A total of 401 private units were sold, nearly double the August figure and the highest since July.
In Australia, residential construction confidence is recovering as new home sales stabilize and building approvals rise, according to the Housing Industry Association. September sales remained stable from August but increased by 8.6% over the last 12 months. Consumer spending fell by 0.7% in September after a 1.6% rise in August, driven by Father’s Day purchases.
In Japan, Tokyo Metro set its IPO price at 1,200 yen per share, the upper end of the expected range. The IPO will raise 348.6 billion yen ($2.33 billion), making it Japan’s largest in six years. The listing is scheduled for October 23 on the Tokyo Stock Exchange.
In India, Hyundai Motor India raised $989.4 million from institutional investors such as BlackRock (NYSE:BLK) and Fidelity in its $3.3 billion IPO. The offering included the sale of 17.5% of shares in the unit, valued at up to $19 billion.
European markets are mixed, with the Stoxx 600 initially rising before retreating. Travel stocks gained while oil and gas stocks fell.
British workers saw smaller wage increases over the summer, with average earnings rising by 4.9% through August, the lowest level in two years. This reinforces expectations that the Bank of England will cut interest rates by 25 basis points in November, as slower wage growth eases inflationary pressures in the UK.
Among individual stocks, Workspace Group (LSE:WKP) shares fell by 0.8% after comparable occupancy dropped by 0.7% in the second quarter due to an unusual number of large client departures, despite strong demand for new leases. The company signed 296 new contracts, but comparable rent fell by 1.4%. However, rent per square foot rose by 1.6%.
Ericsson (TG:ERCB) boosted the telecom sector, rising 9.1% after beating earnings expectations.
Reach PLC (LSE:RCH) gained 2.1% after reporting a 2.5% drop in Q3 revenue but expressed confidence in meeting annual expectations, forecasting digital growth in the final quarter. Digital revenue rose by 2.5%, while print revenue declined by 3.9%. The company maintained its adjusted operating profit forecast of $127.6 million (£97.7 million).
Mitie Group (LSE:MTO) expects 13% revenue growth in H1 2024, reaching $3.13 billion (£2.4 billion), driven by new contracts and extensions. Total contract value increased by 45% to £3.5 billion.
Bellway (LSE:BWY) is up 7.6% after maintaining a positive outlook for the new fiscal year, despite pre-tax profit falling to £226.1 million in 2024, compared to £532.6 million the previous year.
Applied Nutrition plans to raise up to $287 million (£220 million) in its IPO, with shares priced between 136 and 160 pence. At the maximum price, the company would be valued at £400 million.
Top U.S. stocks rose on Monday, with the Dow and S&P 500 reaching new record closes. The Dow added 0.5% to 43,065.22, the Nasdaq gained 0.9%, and the S&P 500 increased by 0.8%.
Optimism was fueled by stable producer prices last Friday, reinforcing an 86.1% chance of a 0.25% rate cut in November, according to CME Group’s FedWatch. However, trading activity was moderate due to Columbus Day.
Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, said modest rate cuts are likely as inflation approaches the 2% target. He emphasized that future decisions will be data-driven and, despite restrictive monetary policy, the labor market remains robust.
Kashkari also stated that the growth of the private credit market could reduce systemic risk in the U.S. financial system, despite reluctance to increase bank capital requirements. He noted that while the market has grown rapidly, these vehicles are less leveraged and pose lower risk than traditional banks.
On the earnings front, reports are expected from Walgreens Boots Alliance (NASDAQ:WBA), UnitedHealth Group (NYSE:UNH), Bank of America (NYSE:BAC), Citi (NYSE:C), Johnson & Johnson (NYSE:JNJ), Charles Schwab (NYSE:SCHW), Goldman Sachs (NYSE:GS), Progressive (NYSE:PGR), PNC Financial Services (NYSE:PNC) and State Street (NYSE:STT) before the opening bell.
After the close, reports are expected from United Airlines (NASDAQ:UAL), Interactive Brokers (NASDAQ:IBKR), J.B. Hunt (NASDAQ:JBHT), Pinnacle Financial Partners (NASDAQ:PNFP), Smart Global Holdings (NASDAQ:SGH), Enerpac Tool Group (NYSE:EPAC), Equity Bancshares (NYSE:EQBK), Omnicom Group (NYSE:OMC), Fulton Financial Corp. (NASDAQ:FULT), and more.