U.S. index futures are mixed in pre-market trading on Monday, following record highs for the Dow Jones and S&P 500 and their best weekly streaks of 2024. Investors are anticipating more corporate earnings this week, while remaining cautious about overvalued prices and geopolitical risks.
As of 5:05 AM, Dow Jones futures (DOWI:DJI) rose 24 points or 0.06%, S&P 500 futures lost 0.05%, and Nasdaq-100 futures declined 0.17%. The 10-year Treasury yield stood at 4.116%.
In commodities, West Texas Intermediate crude for November rose 1.46% to $70.22 per barrel, while Brent crude for December rose 1.25% to $73.97 per barrel.
Oil futures rose as Saudi Aramco’s CEO remained optimistic about recovering oil demand in China, driven by economic stimulus and aviation fuel demand. Meanwhile, China cut interest rates to reactivate its economy, which is facing slow growth.
Geopolitically, Middle Eastern tensions are rising as a drone exploded near Israeli Prime Minister Netanyahu’s home, followed by Israeli strikes on Hezbollah in Lebanon. Additionally, U.S. energy companies reduced active rigs for the fourth period in five weeks.
However, these gains haven’t yet offset last week’s significant losses when Brent and WTI fell by approximately 7% and 8%, respectively, due to concerns over Chinese demand and easing risks in the Middle East.
Gold reached a record high on Monday, driven by safe-haven demand due to Middle Eastern tensions and the U.S. electoral dispute. Gold (PM:XAUUSD) rose 0.3%, reaching $2,732.04 per ounce.
On today’s U.S. economic agenda, at 8:55 AM, Dallas Fed President Lorie Logan will speak. At 10:00 AM, the September Leading Economic Index will be released, expected to drop 0.3%, compared to a 0.2% decline the previous month. At 5:05 PM, Kansas City Fed President Jeff Schmid will speak, followed by San Francisco Fed President Mary Daly at 6:40 PM.
Asia-Pacific markets closed mixed. Japan’s Nikkei 225 saw a slight drop, and the Topix fell 0.34%. In South Korea, the Kospi rose 0.43%, and the Kosdaq advanced 0.89%. Australia’s S&P/ASX 200 rose 0.74%. Hong Kong’s Hang Seng fell 1.43% in the final trading hour, while China’s CSI 300 rose 0.25%.
China cut benchmark interest rates by 25 basis points, reducing the one-year LPR to 3.10% and the five-year LPR to 3.60%, as part of economic stimulus measures. These cuts follow previous reductions, with real estate support and consumption remaining priorities.
In 2024, China will account for less than half of global steel consumption for the first time in six years, due to the real estate downturn. Global demand, driven by regions like South Asia and Latin America, continues to grow, while Chinese demand is expected to fall to 869 million tons.
The Bank of Japan will hold a two-day meeting through October 31 after the general elections, where newly elected Prime Minister Shigeru Ishiba faces a key test. The bank is likely to keep rates steady, according to Reuters, as stable inflation and global economic risks prevent immediate hikes.
In South Korea, exports fell 2.9% in the first 20 days of October compared to last year. Despite a 36.1% increase in semiconductor exports, automotive and petroleum-related exports fell 3.3% and 40%, respectively. Shipments to China rose 1.2%, while those to the U.S. and EU dropped.
This week, investors await Tokyo’s October inflation data and South Korea’s preliminary Q3 GDP figures.
European markets rose slightly, with the oil and gas sector leading gains, while insurance was the main laggard.
UK property prices rose only 0.3% in October, below the 1.3% monthly average, with more homes available for sale. Some buyers are waiting for clarity on tax changes in the upcoming budget and potential reductions in borrowing costs. Real estate demand remains strong.
Gediminas Simkus of the ECB stated that if inflation continues to fall, borrowing costs will be reduced. While he didn’t predict December’s decision, he indicated less restrictive monetary policy. Investors are betting on rate cuts, with inflation already below 2%.
Basque steelmaker Sidenor is in talks to buy part or all of Spanish train manufacturer Talgo‘s (TG:XTG) shares.
WiseTech Global (TG:17W) is investigating issues related to its CEO, Richard White, after media allegations about his personal life, including payments to an ex-partner. White faces accusations of misconduct, and the company is seeking external advice to assess the impact of these allegations.
Prosus NV (EU:PRX) plans to generate $400 million in adjusted profit before interest and taxes from its e-commerce operations by March. CEO Fabricio Bloisi stated that this growth pace will continue, with e-commerce becoming a major profit and cash flow source for the group in the future.
Ocean Wilsons Holdings (LSE:OCN) will sell 56.47% of Wilson Sons to SAS Shipping for $768 million, resulting in $593 million net after taxes and costs. The deal is expected to close next year.
XLMedia (LSE:XLM) will sell its U.S. businesses to Sportradar (TG:1M4) for up to $30 million. After the sale, the company will focus on North American profit distribution and selling European and Canadian assets.
FirstGroup (LSE:FGP) acquired Anderson Travel, which operates around 40 buses in London. Founder Mark Anderson will continue leading operations, with the company generating $9.5 million in revenue last year.
Shares of JDE Peet’s (TG:JDE) jumped 16.9% after naming Rafael Oliveira as CEO, and shares of Moller-Maersk (TG:DP4A) rose 3.9% after announcing the immediate suspension of all transport bookings to and from Haiti due to the country’s political crisis.
U.S. stocks closed higher on Friday, with the Nasdaq gaining 0.6% and the S&P 500 rising 0.4%, both setting new closing records. The Dow also rose 0.1%, ending at 43,275.91. Notably, Netflix (NASDAQ:NFLX) surged 11.1% after announcing better-than-expected quarterly results. American Express (NYSE:AXP) fell 3.2% due to lower-than-expected revenues.
The U.S. Commerce Department reported a slight dip in September housing starts, down 0.5%, resulting in an annual rate of 1.354 million, after a 7.8% increase in August. Economists had predicted a 0.4% decline. The report also revealed a steep 2.9% drop in building permits, a future demand indicator, to 1.428 million, exceeding expectations of a smaller 1% decline. Permits had risen 4.6% the previous month.
On the earnings front, reports from Dynex Capital (NYSE:DX), Lufax (NYSE:LU), Kaspi.kz (NASDAQ:KSPI), Sandy Spring Bank (NASDAQ:SASR), HBT Financial (NASDAQ:HBT), Guaranty Bank & Trust (NYSE:GNTY) and Preferred Bank (NASDAQ:PFBC) are expected before the open.
After the close, earnings reports from SAP (NYSE:SAP), Nucor (NYSE:NUE), WR Berkley (NYSE:WRB), BOK Financial (NASDAQ:BOKF), Logitech (NASDAQ:LOGI), Zions Bancorporation (NASDAQ:ZION), AGNC Investment Corp (NASDAQ:AGNC), Washington Trust Bancorp (NASDAQ:WASH), TFI International (NYSE:TFII) and RLI Corp (NYSE:RLI) are expected.