Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
Trading May Be Subdued Ahead Of U.S. Elections, Inflation Data
US Market
The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to add to the strong gains posted during last Friday’s volatile session.
Stocks may continue to benefit from bargain hunting, as the advance seen last Friday came following four straight days of losses.
Optimism the Federal Reserve will slow the pace of interest rate hikes may also contribute to initial strength, although buying interest may be somewhat subdued.
Traders may be reluctant to make significant moves ahead of the U.S. midterm elections on Tuesday and the release of consumer price inflation data on Thursday.
The midterm elections will determine whether Democrats maintain control of Congress, while the inflation data could impact the outlook for interest rates.
Any early upside on Wall Street may also be limited by a drop by shares of Apple (AAPL), with the tech giant down by 1.2 percent in pre-market trading.
Apple is moving lower after warning Covid-19 restrictions in China are hindering iPhone production and will lead to lower than expected shipments.
Stocks saw significant volatility during trading on Friday before eventually ending the session sharply higher. With the strong upward move, the major averages regained ground after closing lower for four straight sessions.
The major averages all posted strong gains on the day. The Dow jumped 401.97 points or 1.3 percent to 32,403.22, the Nasdaq surged 132.31 points or 1.3 percent to 10,475.25 and the S&P 500 shot up 50.66 points or 1.4 percent to 3,770.55.
Despite the rebound on the day, the major averages all moved notably lower for the week. The Dow slumped by 1.4 percent, the S&P 500 tumbled by 3.4 percent and the Nasdaq plunged by 5.7 percent.
The volatility on the day came following the release of the Labor Department’s closely watched monthly employment report for October.
The report showed non-farm payroll employment jumped by 261,000 jobs in October after surging by an upwardly revised 315,000 jobs in September.
Economists had expected employment to climb by about 200,000 jobs compared to the addition of 263,000 jobs originally reported for the previous month.
Meanwhile, the Labor Department said the unemployment rate rose to 3.7 percent in October from 3.5 percent in September. The unemployment rate was expected to inch up to 3.6 percent.
The report generated a mixed reaction among traders, creating uncertainty about the outlook for future interest rate hikes.
Gold stocks skyrocketed on the day, resulting in a 10.3 percent surge by the NYSE Arca Gold Bugs Index. The index bounced off its lowest closing level in a month. The rally by gold stocks came amid a sharp increase by the price of the precious metal.
Substantial strength was also visible among steel stocks, as reflected by the 7.8 percent spike by the NYSE Arca Steel Index. With the jump, the index reached a two-month closing high.
Computer hardware stocks also saw considerable strength on the day, driving the NYSE Arca Computer Hardware Index up by 4.0 percent.
Semiconductor, chemical and banking stocks also showed strong moves to the upside, while telecom and networking stocks saw notable weakness.
U.S. Economic Reports
The Federal Reserve is scheduled to release its report on consumer credit in the month of September at 3 pm ET. Consumer credit is expected to increase by $33.0 billion.
At 3:40 pm ET, Cleveland Federal Reserve President Loretta Mester and Boston Federal Reserve President Susan Collins are due to participate in a moderated discussion before a hybrid Women in Economics Symposium organized by the Cleveland Fed.
Richmond Federal Reserve President Thomas Barkin is scheduled to give welcome remarks before a hybrid Demystifying Inflation District Dialogue hosted by the Richmond Fed at 6 pm ET.
Stocks in Focus
Shares of both Ouster (OUST) and Velodyne (VLDR) are moving sharply higher in pre-market trading after the lidar sensor makers entered into a definitive agreement to merge in an all-stock transaction.
Identity management software maker Okta (OKTA) is also likely to see initial strength after Guggenheim upgraded its rating on the company’s stock to Buy from Neutral.
On the other hand, shares of BioNTech (BNTX) are seeing pre-market weakness even though the drugmaker reported third quarter results that exceeded analyst estimates.
Europe
European stocks are turning in a mixed performance on Monday, as a cautious undertone prevails ahead of mid-term elections in the United States and the latest U.S. consumer inflation report due this week.
China reopening hopes have faded after the country reiterated its commitment to maintaining strict COVID-related curbs.
While the U.K.’s FTSE 100 Index is down by 0.2 percent, the French CAC 40 Index is nearly flat and the German DAX Index is up by 0.8 percent.
Swedish Match has moved to the upside after Philip Morris International said it was going ahead with its $16 billion plan to buy the Swedish firm.
Ryanair Holdings has also moved sharply higher after the budget carrier raised its expectations for full-year passenger traffic.
Q. beyond shares have also surged. After posting a consolidated net loss of 2.8 million euros for the third quarter, the cloud and ICT provider said it expects a strong fourth quarter.
Alongside growth in the organic business, revenues will also benefit for the first time from the majority stake recently acquired in productive-data, the company said.
Meanwhile, PayPoint has slumped in London after it agreed to buy gifting and engagement firm Appreciate Group for 83 million pounds ($94.4 million) in shares and cash.
GSK has also moved to the downside. The drug maker said a late-stage study of its blood cancer drug Blenrep failed to meet its main goal.
In economic news, German industrial production grew 0.6 percent month-on-month in September, reversing a revised 1.2 percent drop in August, Destatits reported. This was faster than economists’ forecast of 0.2 percent. On a yearly basis, industrial output grew 2.6 percent.
U.K. house prices were down 0.4 percent in October from September, when prices slid 0.1 percent, data published by the Llyods Bank subsidiary Halifax showed.
This was the second consecutive decrease and the sharpest drop since February 2021. The rate came in line with expectations.
Asia
Asian stocks ended mostly higher on Monday, although overall gains remained limited after China reiterated its commitment to maintaining strict COVID-related curbs and data showed further deterioration in China’s trade balance in October.
Underlying sentiment remained supported somewhat after several Fed officials signaled last week that they supported a smaller rate hike in December.
Also helping aid risk sentiment, a tweet by Bloomberg stated that the White House is privately suggesting Ukraine’s president indicate an openness to talks with Russia.
China’s Shanghai Composite Index edged up 0.2 percent to 3,077.82 despite officials from China’s health commission reiterating their commitment to maintain the zero-COVID policy, which entails strict lockdown measures to prevent transmission. Hong Kong’s Hang Seng Index surged 2.7 percent to 16,595.91.
Data showed earlier in the day that Chinese exports and imports both unexpectedly shrank in October in U.S. dollar terms as a result of weakening global demand and new COID-19 curbs at home. Exports fell by 0.3 percent from a year ago and imports declined 0.7 percent.
Japanese stocks rallied, with the Nikkei 225 Index jumping 1.2 percent to 27,527.64 on expectations that the Federal Reserve will slow its pace of interest rate hikes. The broader Topix closed 1.0 percent higher at 1,934.09.
JFE Holdings soared 7.3 percent after the steelmaker raised its annual profit outlook. Peers Nippon Steel and Kobe Steel jumped 3.1 percent and 3.9 percent, respectively.
On the flip side, office equipment maker Ricoh plunged 7.8 percent and smartphone maker Sharp fell 3.3 percent on downbeat earnings.
Seoul stocks rose sharply to extend gains for a second straight session. The Kospi climbed 1.0 percent to 2,371.79.
Tech and auto giants topped the gainers list after reports that the chair of Boeing Co. met with top officials of Samsung Electronics, Hyundai Motor Group and Hanwha Solutions to discuss new business cooperation.
Australian markets rose notably, with mining and energy stocks leading the surge. Financials fell, with Westpac Banking Corp tumbling 3.9 percent after the country’s No. 3 lender reported a drop in its annual earnings.
The benchmark S&P/ASX 200 Index rose 0.6 percent to 6,933.70, while the broader All Ordinaries Index gained 0.6 percent to settle at 7,129.20.
Commodities
Crude oil futures are falling $0.61 to $92.00 a barrel after soaring $4.44 to $92.61 a barrel last Friday. Meanwhile, after spiking $45.70 to $1,676.60 an ounce in the previous session, gold futures are inching up $2.70 to $1,679.30 an ounce.
On the currency front, the U.S. dollar is trading at 146.33 yen versus the 146.62 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $0.9979 compared to last Friday’s $0.9957.
