U.S. index futures fell in pre-market trading on Thursday, pressured by GDP readings that fell short of expectations, along with disappointing earnings reports from Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT). Reports on the Personal Consumption Expenditures (PCE) price index, a preferred inflation indicator by the Fed, and the October payroll report are highly anticipated as they will influence investor expectations for the upcoming interest rate decision.
At 6:25 AM, Dow Jones futures (DOWI:DJI) were down 214 points, or 0.51%. S&P 500 futures lost 0.8%, while Nasdaq-100 futures dropped 1.1%. The yield on 10-year Treasury bonds stood at 4.276%.
In the commodities market, West Texas Intermediate crude oil for December rose 0.47% to $68.93 per barrel, while Brent for December increased 0.39% to $72.83 per barrel.
Oil prices climbed on Thursday, supported by an unexpected drop in U.S. oil and gasoline inventories, indicating stronger-than-expected demand. Additionally, the potential decision by OPEC+ to postpone a production increase provided further support to prices, which had previously declined due to reduced tensions in the Middle East. OPEC+ is scheduled to meet on December 1.
Gold was priced at $2,773.89, down 0.43%. Gold reached a record of $2,790.10 an ounce, driven by a flight to safe-haven assets ahead of the U.S. elections, despite positive economic data that could influence Fed rate cuts. The metal has risen more than a third this year, supported by central bank purchases and geopolitical tensions.
In today’s U.S. economic agenda, at 8:30 AM, important data will be released, including personal income for October, expected to grow by 0.4%, up from the previous 0.2%, and personal spending, also anticipated at 0.4%.
The PCE index, which measures inflation, is expected to rise by 0.2% in October, reaching 2.1% year-over-year, slightly below the prior 2.2%. The core PCE is projected at 0.3% for the month, with a yearly rate of 2.6%.
At the same time, initial jobless claims for October 26 are forecasted at 235,000, up from 227,000. Also at 8:30 AM, the Q3 Labor Cost Index will be released, with expectations of 1.0%. At 9:45 AM, the Chicago PMI for October is expected to be reported at 46.1, down from the previous 46.6.
Among the major Asian indices, South Korea’s Kospi led the losses, falling 1.45% to 2,556.15, its lowest level since September. China’s CSI 300 closed virtually unchanged. Australia’s S&P/ASX 200 dropped 0.25%. Japan’s Nikkei 225 ended down 0.5% following the BOJ’s decision, while Hong Kong’s Hang Seng rose 0.13% in the final trading hour.
The Bank of Japan maintained its interest rates at 0.25%, citing the need to assess global economic conditions. The bank projected inflation near 2%, but indicated that it would only raise rates if domestic economic recovery is consistent. Internal and external political uncertainties, particularly following the loss of a governing majority, influence the pace of adjustments.
Japan’s industrial production grew 1.4% in September, exceeding the 0.8% forecast, driven by increases in automobile and chemical manufacturing. However, production fell 2.8% compared to the previous year. Retail sales declined 2.3% in September, highlighting uncertainties about future demand.
In China, the largest banks reported increased profits for the third quarter, driven by reduced provisions. AgBank saw a net profit increase of 5.88%, while ICBC reported a rise of 3.8%. However, net interest margins declined for some banks, reflecting ongoing pressures due to government policies and moderate credit demand.
China’s industrial activity expanded in October after six months, with the PMI rising to 50.1. Beijing expects recent stimulus to promote economic growth and revive investments, despite challenges in the real estate sector and low consumer confidence. Chinese service and construction activity grew slightly, with the non-manufacturing PMI rising to 50.2, up from 50.0 in September, according to the National Bureau of Statistics.
In South Korea, Kakao Corp. founder Brian Kim was released after posting bail of $218,000 (300 million won) while facing accusations of stock manipulation related to the acquisition of SM Entertainment in 2023. Kim is accused of inflating SM’s stock to surpass a rival bid, a case with potential implications for Kakao and the country’s tech sector.
Samsung Electronics reported lower profits compared to last year, primarily impacted by its semiconductor unit, which posted an operating profit of $2.8 billion (3.86 trillion won), a 40% decline from the previous quarter.
European markets are trading lower, led by losses in the retail sector, as investors review eurozone inflation data and corporate earnings.
Eurozone inflation rose to 2% in October, surpassing expectations of 1.9%. In September, the rate was revised to 1.7%. Meanwhile, third-quarter economic growth of 0.4% surprised positively but with forecasts of future slowdown.
Inflation in France remains below the ECB’s target, with consumer prices in October up 1.5% year-over-year. This scenario reinforces the possibility of further rate cuts, with the ECB likely reducing rates for the third time in December. The French economy is expected to slow down as the economic boost from the Olympics fades and fiscal tightening looms.
Shares of BNP Paribas (EU:BNP) fell after the bank reported a 2.6% decline in retail revenue in the third quarter. Nevertheless, it reported a net profit of €2.87 billion, a 5.9% increase, in line with expectations of €2.86 billion, driven by growth in investment banking and cost control. Total revenue of €11.94 billion also met forecasts.
Geberit (LSE:0RQ0) exceeded expectations in the third quarter with a net profit of 150.3 million Swiss francs, above the forecast of 138.1 million, and revenue of 762 million francs, surpassing the estimated 727.6 million.
In terms of quarterly reports, numbers are expected from Uber (NYSE:UBER), Peloton (NASDAQ:PTON), Merck (NYSE:MRK), ConocoPhillips (NYSE:COP), SiriusXM (NASDAQ:SIRI), Altria (NYSE:MO), Mastercard (NYSE:MA), Estée Lauder (NYSE:EL), Kellanova (NYSE:K) and Norwegian Cruise Line (NYSE:NCLH) before the market opens.
After the close, results from Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Intel (NASDAQ:INTC), Atlassian (NASDAQ:TEAM), ICF International (NASDAQ:ICFI), Eldorado Gold (NYSE:EGO), Ardelyx (NASDAQ:ARDX), AES Corporation (NYSE:AES), Nine Energy Service (NYSE:NINE) and United States Steel (NYSE:X), among others, are awaited.