US Equity Futures Tick Higher Before Earnings Test: Markets Wrap

(Bloomberg) — US equity futures started the week on a note of optimism as investors looked ahead to corporate results for further vindication of soft economic landing bets.

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Contracts on the S&P 500 ticked higher and those on the rates-sensitive Nasdaq 100 rose 0.3%, pointing to extended gains for a rally that propelled the index to a fresh record last week. Oil fell as traders bet that China’s stimulus will fall short of boosting consumption. Cash Treasuries trading is closed Monday for a US holiday.

A newly accommodative Federal Reserve is providing fresh fodder for bulls — but they’re also fighting against lofty valuations. The S&P 500’s 20% gain through September has been its strongest performance for the first nine months of a year since 1997, according to National Bank of Canada economists including Stefane Marion. That’s pushed earnings-based valuations pushed to rich levels across industries.

“It remains uncertain whether the market will finish the year as strongly as it began and whether this easing cycle will provide substantial momentum for equities,” the economists wrote in a note to clients. “The current easing cycle is unfolding in an environment of unusually high valuations.”

Meanwhile, China’s main CSI 300 Index rose about 2% in volatile trading Monday, after capping its worst week since late July as Beijing’s latest efforts to jumpstart growth disappoint those seeking more details on incentives.

Bitcoin climbed to the highest level in two weeks as investors took disappointment over China as good news for cryptocurrencies which are seen as potential beneficiaries of China stock outflows.

Despite promises of more support for the struggling property sector and hinting at greater government borrowing, a briefing by China’s Finance Minister Lan Fo’an on the weekend didn’t produce the headline dollar figure for fresh fiscal stimulus that the markets had sought.

Corporate scorecards are the next test. Results from Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. are due Tuesday, where the banks will provide an early verdict on the impact of interest rate cuts on their bottom lines. JPMorgan Chase & Co., Wells Fargo & Co and Bank of New York Mellon Corp. all topped estimates Friday.

In Europe, profits are anticipated to come in lower due to anemic economic growth and a stunted recovery in China, which is likely to drag down luxury goods makers like LVMH.

In the premarket, MicroStrategy Inc. led gains in cryptocurrency-linked companies. Boeing Co. fell as the beleaguered planemaker plans to cut its global workforce by about 10% and announced $5 billion in charges. SentinelOne Inc. shares rose 4.2% as Piper Sandler upgraded the cybersecurity software company saying current estimates of its market share gains are too low.

Key events this week:

  • China trade balance, Monday

  • India CPI, Monday

  • UK unemployment rate and average weekly earnings, Tuesday

  • Eurozone industrial production, Tuesday

  • Canada CPI, Tuesday

  • Goldman Sachs, Bank of America, Citigroup earnings, Tuesday

  • Republican presidential candidate Donald Trump will be interviewed by Bloomberg editor-in-chief John Micklethwait at the Economic Club of Chicago, Tuesday

  • New Zealand CPI, Wednesday

  • Thailand, Philippines and Indonesia central bank interest-rate decisions, Wednesday

  • UK CPI, PPI, RPI and house price index, Wednesday

  • ASML, Morgan Stanley earnings, Wednesday

  • Australia unemployment, Thursday

  • Eurozone CPI, ECB rate decision, Thursday

  • US retail sales, jobless claims, industrial production, business inventories, Thursday

  • TSMC, Netflix earnings, Thursday

  • Japan CPI, Friday

  • China GDP, retail sales, industrial production, home prices, Friday

  • UK retail sales, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.2% as of 7:50 a.m. New York time

  • Nasdaq 100 futures rose 0.3%

  • Futures on the Dow Jones Industrial Average fell 0.2%

  • The Stoxx Europe 600 was little changed

  • The MSCI World Index was little changed

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%

  • The euro fell 0.2% to $1.0912

  • The British pound fell 0.2% to $1.3045

  • The Japanese yen fell 0.4% to 149.68 per dollar

Cryptocurrencies

  • Bitcoin rose 3.3% to $64,837.83

  • Ether rose 3% to $2,534.52

Bonds

  • The yield on 10-year Treasuries was little changed at 4.10%

  • Germany’s 10-year yield was little changed at 2.27%

  • Britain’s 10-year yield advanced three basis points to 4.23%

Commodities

  • West Texas Intermediate crude fell 2.2% to $73.89 a barrel

  • Spot gold fell 0.1% to $2,653.25 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from James Hirai, Sagarika Jaisinghani and Michael Msika.

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