U.S. index futures are pointing to a flat open on Monday, with stocks likely to exhibit indecision following last week’s rally.
Traders may be hesitant to make significant moves amid recent market volatility, where markets saw a sharp drop earlier in the month followed by a substantial rebound. The economic calendar is relatively quiet at the beginning of the week, following last week's data deluge. However, attention is expected to shift to key events later in the week.
The minutes from the Federal Reserve's latest policy meeting and remarks by Fed Chair Jerome Powell, along with other officials at the Jackson Hole Economic Symposium, may provide insights into interest rate prospects. According to CME Group’s FedWatch Tool, there is a 73.5% likelihood of a quarter-point rate cut next month and a 26.5% chance of a half-point rate cut.
In stock news, shares of Advanced Micro Devices (AMD) are gaining in pre-market trading after the company announced a $4.9 billion cash and stock acquisition of server maker ZT Systems.
On Friday, after an indecisive start, stocks mostly trended higher throughout the trading day. Major averages firmed up in positive territory after fluctuating in early trading. The Dow rose by 96.70 points or 0.2% to 40,659.76, the Nasdaq climbed by 37.22 points or 0.2% to 17,631.72, and the S&P 500 increased by 11.03 points or 0.2% to 5,554.25.
For the week, the Nasdaq surged by 5.3%, the S&P 500 spiked by 3.9%, and the Dow rose by 2.9%.
The recent strength on Wall Street reflects upward momentum, with the Nasdaq and the S&P 500 closing higher for the seventh consecutive session, offsetting early-month declines. Buying interest was bolstered by data easing economic concerns and increasing confidence in an upcoming Federal Reserve rate cut.
While the positive retail sales data has lessened the likelihood of a 50 basis point rate cut, the Fed is still expected to reduce rates by at least 25 basis points.
In economic news, preliminary data from the University of Michigan indicated an improvement in consumer sentiment for August, rising to 67.8 from July’s 66.4, exceeding economists' expectations of 66.9. This marks a rebound from the lowest consumer sentiment level since November 2023.
On the inflation front, year-ahead and long-term expectations remained steady at 2.9% and 3.0%, respectively.
Meanwhile, the Commerce Department reported a significant decline in new residential construction for July. Housing starts dropped by 6.8% to an annual rate of 1.238 million after a 1.1% rise in June. This was below economists' expectations of a 1.7% decrease to 1.330 million.
Building permits—a future housing demand indicator—also fell by 7.0% to an annual rate of 1.396 million in July, below the anticipated 1.1% reduction to 1.430 million.
Gold stocks saw significant gains, with the NYSE Arca Gold Bugs Index surging by 3.0% due to a sharp increase in gold prices. Telecom stocks also showed considerable strength, reflected by a 1.3% gain in the NYSE Arca North American Telecom Index. Banking and networking stocks performed well, while airline stocks retreated after Thursday’s gains.
### Commodity and Currency MarketsCrude oil futures are currently down $0.77 to $75.88 per barrel, following a fall of $1.51 to $76.65 per barrel last Friday. Gold futures, which previously surged $45.40 to $2,537.80 an ounce, are now slipping $5.40 to $2,532.40 an ounce.
On the currency front, the U.S. dollar is trading at 146.15 yen, compared to 147.63 yen at the close of New York trading last Friday. Against the euro, the dollar stands at $1.1036, a slight increase from last Friday's $1.1027.
### Asia
Asian markets delivered a mixed performance on Monday. Investors are looking for signals from the upcoming Federal Open Market Committee (FOMC) meeting minutes and speeches by Fed Chair Jerome Powell and other officials regarding future interest rate movements.
The dollar began the week on a weaker note after several Federal Reserve officials suggested it might be time to adjust borrowing costs. In Asian trading, oil and gold prices dipped slightly as the U.S. worked to broker a deal between Israel and Hamas to end the conflict in Gaza.
China’s Shanghai Composite Index climbed 0.5% to 2,893.67 ahead of Tuesday’s central bank interest rate decision. Hong Kong's Hang Seng Index advanced 0.8% to 17,569.57.
However, Japanese markets fell due to profit-taking after recent gains. The Nikkei 225 Index dropped 1.8% to 37,388.62, ending a five-day winning streak, with the yen firming on dovish Fed expectations. The broader Topix Index declined 1.4% to 2,641.14, as investors awaited Japanese inflation data due this week. Notably, automakers Honda, Nissan, Mitsubishi, and Toyota declined by 1-3%. Retailer Seven & I Holdings surged 22.7% following a takeover bid.
Seoul's Kospi Index dropped 0.9% to 2,674.36, as investors locked in profits following recent gains. In Australia, markets edged up slightly as advances in banking and gold stocks balanced out losses in the mining sector. The S&P/ASX 200 Index inched up 0.1% to 7,980.40, while the broader All Ordinaries Index finished marginally higher at 8,194.80.
In New Zealand, the benchmark S&P/NZX-50 Index dipped 0.5% to 12,662.11. Dairy company a2 Milk plummeted 18.9% to a four-month low after its FY24 result and guidance downgrade.
### Europe
European markets struggled for direction on Monday after four consecutive days of gains driven by optimism over potential U.S. rate cuts. The French CAC 40 Index increased by 0.5%, the German DAX Index by 0.3%, and the U.K.'s FTSE 100 Index by 0.1%.
Aerospace and defense stocks declined following reports that Germany, the second-largest contributor of aid to Ukraine, plans to halve its military aid to Kyiv in 2025 due to spending cuts. Major companies like BAE Systems, Rolls-Royce Holdings, Rheinmetall, and Saab AB all saw notable drops.
Conversely, Plus500 surged after the online trading platform announced strong interim results and forecast that its annual results would exceed market expectations. British housebuilders Barratt Developments and Redrow also gained after announcing a merger deal expected to be completed later this week.
### U.S. Economic News
Federal Reserve Board Governor Christopher Waller will deliver opening remarks at the Summer Workshop on Money, Banking, Payments, and Finance hosted by the Federal Reserve Board of Governors at 9:15 am ET.
Later, at 10 am ET, the Conference Board will release its report on leading economic indicators for July. The leading economic index is expected to decrease by 0.3% in July, following a 0.2% decline in June.
