(Bloomberg) — U.S. stock futures struggled for direction, giving up short gains sparked by a monetary policy shift in China, as investors focused on escalating geopolitical risks and expectations of interest rate cuts in the U.S. and other major economies.
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Contracts on the Nasdaq 100 fell 0.2% and contracts on the S&P 500 fell 0.1%, after rising earlier after China announced that authorities would adopt a “somewhat loose” strategy next year. More steps on the fiscal side could be revealed at the Central Economic Work Conference on Wednesday. While Beijing’s pledge boosted Asian markets and supported US-listed Chinese stocks in pre-market trading, gains elsewhere were short-lived.
The European Stoxx 600 index also retreated from the rise, despite the advance of sectors exposed to China, including mining companies and consumer products.
“The somewhat lenient monetary policy stance by the Politburo is welcome news, although it will not fundamentally change the situation for the Chinese economy,” said Joachim Clement, head of strategy, economics, environment and governance at Panmure Librom. “What we need is significantly more fiscal stimulus supported by more flexible monetary policy.”
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Crude oil prices rose, as did gold, after the overthrow of Bashar al-Assad’s regime in Syria destabilized the already turbulent Middle East. South Korea also risks prolonging the political impasse, as opposition lawmakers push for another impeachment vote on President Yeon Suk-yul. This witnessed continued declines in the Korean markets, while the won fell by about 1% against the dollar.
In the absence of further geopolitical escalation, investors will turn their attention to central bank meetings this week. The European Central Bank, which meets for the first time since the collapse of the Paris and Berlin governments, is expected to cut interest rates, as are the Bank of Canada and the Swiss National Bank. The Australian Central Bank is likely to keep interest rates unchanged.
US inflation data will be another key event, likely determining whether the Fed will ease policy again at its December 18 meeting. While Friday’s November jobs report indicated the labor market is cooling enough to allow for interest rate cuts, the inflation reading could add to uncertainty, if it shows price pressures accelerating last month by more than the 0.3% forecast in the survey.
“Inflation remains very high regardless, which limits the central bank’s ability to ease monetary policy,” said Daniela Sabine Hathorne, senior market analyst at Capital.com. Tell customers in a note. “Current odds show an 87% chance of a 25 basis point cut next week, but this could change quickly if CPI data does not come in as expected.”
Among individual stock movers, Turkish construction-related stocks such as Oyak Cimento Fabrikalari AS and Cimsa Cimento Sanayi VE rose as investors bet the companies will play a role in Syria’s reconstruction.
Among the US pre-market gainers was Apollo Global Management Inc. and Workday Inc. Which are set to join the S&P 500. Super Micro Computer Inc. shares jumped. After the company was given more time to become compliant with Nasdaq listing rules. On the downside, Nvidia Corp. In the pre-market due to news of an investigation in China due to suspicion that the artificial intelligence chip manufacturer violated antitrust laws.
Main events this week:
Consumer price index in Mexico, Monday
Australian interest rate decision, Tuesday
German Consumer Price Index, Tuesday
Consumer price index in Brazil, Tuesday
Japanese Producer Price Index, Wednesday
Chinese leaders are expected to hold the annual Central Economic Work Conference, starting Wednesday and continuing until December 12
Reserve Bank of Australia Deputy Governor Andrew Hauser speaks on Wednesday
US Consumer Price Index, Wednesday
Interest rate decision in Canada, Wednesday
Interest rate decision in Brazil, Wednesday
Unemployment in Australia, Thursday
Indian Consumer Price Index, Thursday
The European Central Bank’s interest rate decision in the euro zone, Thursday
Interest rate decision in Switzerland, Thursday
French CPI, Friday
Industrial production in the eurozone, Friday
Some key movements in the markets:
Stocks
The Stoxx Europe 600 was little changed as of 11:56 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures fell 0.2%
Dow Jones Industrial Average futures were little changed
MSCI Asia Pacific Stock Index rises 0.4%
MSCI Emerging Markets Index rises 0.6%
Currencies
The Bloomberg Dollar Spot Index was little changed
There was little change in the euro at $1.0569
The Japanese yen fell 0.3 percent to 150.45 yen to the dollar
The yuan in external transactions rose 0.1 percent to 7.2735 per dollar
The British pound rose 0.2 percent to $1.2768
Cryptocurrencies
Bitcoin fell 2 percent to $98,129.36
Ethereum fell 3.5% to $3,855.33
Bonds
The yield on the 10-year Treasury note rose 1 basis point to 4.17%.
The yield on 10-year German bonds was little changed at 2.10%.
The yield on British 10-year bonds fell two basis points to 4.26%.
Goods
Brent crude rose 1.1% to $71.91 per barrel
Spot gold rose 0.8 percent to $2,655.53 per ounce
This story was produced with assistance from Bloomberg Automation.
–With assistance from Michael Msika, Catherine Bosley, and Henry Wren.
