US Stock Futures Trim Weekly Drop; Treasuries Gain: Markets Wrap
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(Bloomberg) — US stock futures pointed to gains at the Wall Street open as investors looked past a jump in borrowing costs that cooled market sentiment earlier in the week.
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Contracts on the S&P 500 rose 0.3%, suggesting the underlying gauge could trim its first weekly drop in seven. Treasury yields declined for a second day, leaving the rate on the 10-year note up about one tenth of a percentage point in the week.
Traders’ attention is turning to US economic data next week, including a monthly payrolls report, for fresh clues on the scope for Federal Reserve interest-rate cuts. With the Nov. 5 presidential vote approaching, some analysts are predicting a stock market boost should Donald Trump win, while others warn it may reignite inflation and slow the pace of Fed easing.
“The markets at least are sniffing out a Republican sweep, and perhaps an electoral/Senate landslide,” Stephen Auth, chief investment officer for equities at Federated Hermes, wrote in a note. “Should this occur, and we think it very well might, we’d expect the modest rally we’ve experienced since July to pick up steam. A Trump win would likely favor the old economy financial, industrial, energy and small cap stocks.”
Strategists at Bank of America Corp., led by Michael Hartnett, highlighted other pre-election trades. Investors are continuing to load up on gold as a hedge against inflation and populism, while other popular themes — like selling bonds and buying artificial intelligence stocks, are holding up — they said.
BofA’s Hartnett Says Bets on Gold Are Rising Before US Election
The precious metal hit a record high on Wednesday and gold funds recorded their biggest weekly inflow since July 2020, according to the BofA strategists. The yield on US 10-year government bonds briefly breached 4.2% this week, the highest level since July, while shares of US chip company Nvidia Corp. touched an all-time high.
Meanwhile, Europe’s Stoxx 600 index retreated on Friday after lackluster results from companies including French Cognac maker Remy Cointreau SA and Mercedes-Benz Group AG. The regional stocks measure is headed for a more than 1% drop in the week.
“It’s been volatile,” said Vidya Anant, senior portfolio manager and head of sustainable equity funds Europe at DWS Asset Management. “We’re seeing a little bit of a risk-off behaviour, nobody’s willing to take the move into equities at this point especially just before the elections.”
Corporate Highlights:
Remy Cointreau slashed its annual sales guidance on weak demand in the US and China where consumers continue to cut spending.
Eni lowered profit guidance for the year, reflecting a worsening oil-price outlook, even as third-quarter earnings beat analyst estimates.
South Korean prosecutors have indicted BNP Paribas SA for allegedly violating short-selling rules, according to people with direct knowledge of the matter.
Electrolux reported operating profit for the third quarter that missed the average analyst estimate.
NatWest Group Plc raised its outlook for the year after earnings beat estimates in the third quarter.
Mercedes-Benz plans to step up cost improvement measures after fierce competition and weaker demand in China hit the luxury-car maker’s profits.
Thames Water Utilities Ltd. unveiled a proposal on Friday that seeks to raise up to £3 billion ($3.9 billion) from its creditors to buy it more time to avoid going into special administration early next year.
In Asia, the yen was stuck in a range against the dollar ahead of the weekend election that may see Japan’s ruling coalition lose its majority in the lower house of parliament for the first time since 2009. Such an outcome would weaken the yen and Japanese stocks, according to strategists.
China’s central bank kept its one-year policy rate unchanged, after slashing funding costs by the most on record a month ago, suggesting authorities are cautiously pacing monetary stimulus to support the economy.
Chinese Stimulus Insufficient to Curb Deflation Risks, IMF Says
Oil resumed its advanced after a two—day drop, with traders keeping their focus on geopolitical developments in the Middle East and the supply outlook.
Key events this week:
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 7:22 a.m. New York time
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average rose 0.2%
The Stoxx Europe 600 fell 0.2%
The MSCI World Index was little changed
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0824
The British pound was little changed at $1.2984
The Japanese yen was little changed at 151.91 per dollar
Cryptocurrencies
Bitcoin fell 0.3% to $67,924.66
Ether rose 0.1% to $2,538.63
Bonds
The yield on 10-year Treasuries declined two basis points to 4.20%
Germany’s 10-year yield advanced one basis point to 2.28%
Britain’s 10-year yield declined one basis point to 4.22%
Commodities
West Texas Intermediate crude rose 0.7% to $70.70 a barrel
Spot gold fell 0.5% to $2,722.94 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from David Finnerty, Catherine Bosley and Richard Henderson.
