US Futures Drop Ahead of Jobs Data; Nvidia Slips: Markets Wrap

(Bloomberg) — American equity futures slipped as a rally in tech megacaps ran out of steam ahead of jobs data that will give more clues on the outlook for US rates of interest.

Most Read from Bloomberg

Contracts on the S&P 500 and Nasdaq 100 were down around 0.4%. Tesla Inc. shares fell greater than 1% in premarket trading, surrendering a few of yesterday’s 6% gain. Nvidia Corp., Meta Platforms Inc. and Apple Inc. also declined. Paramount Gobal gained on a report Barry Diller is considering making a bid.

The ten-year Treasury yield held Monday’s rise, which was fueled by speculation that a Donald Trump presidency would result in greater US fiscal deficits and better inflation. A gauge of the dollar headed higher for a second day.

Recent data has showed inflation within the US moderating, which is supportive of stocks within the short term, in line with UBS chief strategist Bhanu Baweja. But signs of slowing economic growth will weigh on shares more broadly within the medium term, calling for defensive positioning, he said on Bloomberg TV.

“The central pillar of how markets are more likely to trade over the following six months is lower inflation first within the US, followed by lower growth within the US.” Baweja said. “We’re risk-off in equities, broadly.”

Treasuries have been whipsawed this 12 months as traders swung between buying bonds amid signs of cooling US prices and fears of higher-for-longer rates. Yields on five-year securities have climbed greater than 20 basis points from a low of about 4.20% just below three weeks ago.

After last week’s debate hurt Joe Biden’s probabilities of winning reelection, Wall Street strategists — including ones from Goldman Sachs Group Inc., Morgan Stanley and Barclays Plc. — are taking a fresh take a look at how a Trump victory could play out within the bond market. They’re urging clients to position for sticky inflation and better long-term yields.

Strategists at JPMorgan Chase & Co., then again, said it’s now time to pocket profits on Treasuries.

Federal Reserve Chair Jerome Powell’s speech at an ECB forum in Portugal may provide more clues on the outlook for policy. The ECB’s Lagarde can be scheduled to talk.

Traders may also eye data on US job openings later Tuesday. Strength in hiring has to this point helped the economy weather aggressive Fed tightening, which brought rates of interest to the very best levels in 20 years. With inflation still running above the central bank’s 2% goal, the fear is that any further softening in labor conditions could begin to snowball and put economic growth in danger.

Meanwhile, European stocks declined after policy makers signaled they need more evidence that price pressures are under control, at the same time as the most recent data showed euro-region inflation moderating barely.

French Election Woes

The Stoxx Europe 600 benchmark dropped about 0.7%, led by insurers and automobile makers. France’s CAC 40 erased most of Monday’s gains because the country prepares for a second election round, with the outlook for French assets still uncertain. US equity futures slipped.

Euro-area consumer prices slowed in step with economists’ estimates in June, though the core measure, which excludes volatile items corresponding to food and energy, unexpectedly remained unchanged.

After trimming rates of interest by a quarter-point in June, officials are determining whether inflation is moderating enough to permit further cuts. At this week’s annual ECB retreat in Sintra, Portugal, President Christine Lagarde and Chief Economist Philip Lane said there’s no convincing evidence yet that the threat has passed.

Lagarde “has telegraphed the message thoroughly,” said Frederique Carrier, head of investment strategy at RBC Wealth Management. “We’re not expecting a change in July but quite in September and December.”

The rally in European stocks has stalled in recent weeks because of political turmoil following a snap election call in France. The primary round of the legislative elections narrowed the possible outcomes to 2 — each of which presage prolonged uncertainty for investors. The second round of voting is scheduled for Sunday.

“We’re expecting that France will probably be harder to manipulate, and there will probably be less reforms, it’s not a positive,” said Carrier.

Amongst individual stocks, shares in food services company Sodexo SA fell revenue for the third quarter missed estimates. Tyre maker Michelin slipped in Paris, with analysts citing a pre-close call after markets closed on Monday.

HelloFresh SE shares jumped after JPMorgan said data indicate stabilization in the important thing North America meal-kit business. Siemens Energy AG rose as much as 4.3% after the Financial Times reported that the corporate plans to rent over 10,000 latest employees in its grid business.

Asian shares increased, led by gains in Japan and Hong Kong. The MSCI AC Asia Pacific Index hit its highest since late May amid a rally in Hong Kong-listed property and electric vehicle maker shares.

In commodities, oil traded near a two-month high on an escalation in tensions within the Middle East and concerns over the rapid begin to the Atlantic hurricane season. Iron ore held near the very best close in a couple of month. Gold was little modified.

Key events this week:

  • US job openings, Tuesday

  • Jerome Powell and Christine Lagarde speak at ECB forum in Portugal, Tuesday

  • China Caixin services PMI, Wednesday

  • Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday

  • US Fed minutes, ADP employment, ISM Services, factory orders, initial jobless claims, durable goods, Wednesday

  • Fed’s John Williams speaks, Wednesday

  • UK general election, Thursday

  • US Independence Day holiday, Thursday

  • Eurozone retail sales, Friday

  • US jobs report, Friday

  • Fed’s John Williams speaks, Friday

Among the major moves in markets:

Stocks

  • S&P 500 futures fell 0.5% as of seven:41 a.m. Recent York time

  • Nasdaq 100 futures fell 0.6%

  • Futures on the Dow Jones Industrial Average fell 0.4%

  • The Stoxx Europe 600 fell 0.7%

  • The MSCI World Index was little modified

Currencies

  • The Bloomberg Dollar Spot Index was little modified

  • The euro fell 0.2% to $1.0722

  • The British pound was little modified at $1.2648

  • The Japanese yen fell 0.1% to 161.63 per dollar

Cryptocurrencies

  • Bitcoin fell 0.8% to $62,729.46

  • Ether fell 0.5% to $3,447.66

Bonds

  • The yield on 10-year Treasuries declined one basis point to 4.45%

  • Germany’s 10-year yield was little modified at 2.61%

  • Britain’s 10-year yield declined three basis points to 4.26%

Commodities

  • West Texas Intermediate crude rose 0.7% to $83.97 a barrel

  • Spot gold fell 0.4% to $2,321.89 an oz

This story was produced with the help of Bloomberg Automation.

–With assistance from Sagarika Jaisinghani and Michael Msika.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

Leave a Comment

Copyright © 2024. All Rights Reserved. Finapress | Flytonic Theme by Flytonic.