U.S. stock futures are indicating a downward trend as the market prepares to open on Monday, a reversal from the significant gains observed at last Friday's close. This drop is partly due to traders opting to secure profits after the recent surge.
Last week ended on a high note for major indices following a rally driven by encouraging non-farm payroll data. This positive employment report eased some concerns over Middle East tensions and fueled widespread purchasing across multiple sectors. The Dow reached a new record of 42,352.75, marking an increase of 341.16 points or 0.8%. Similarly, the S&P 500 rose by 51.13 points or 0.9% to end at 5,751.07, while the Nasdaq moved up by 219.37 points or 1.2%, concluding at 18,137.85.
Prominent companies including NVIDIA Corporation, Amazon, Meta Platforms, Berkshire Hathaway, JP Morgan Chase, and others recorded gains between 1% to 4%.
The Labor Department's latest figures reveal a rise in non-farm payroll employment by 254,000 in September, exceeding economists’ projections of 140,000. Additionally, the unemployment rate slightly decreased to 4.1%, counter to expectations of stability.
The robust job growth suggests a resilient economy, although it tempers anticipations for substantial interest rate cuts. Bill Adams, the Chief Economist at Comerica Bank, suggests a less aggressive rate cut might be considered in November. Meanwhile, Gina Bolvin of Bolvin Wealth Management Group anticipates that rising oil prices and increased wages might spark inflation concerns for the Federal Reserve.
Jamie Cox at Harris Financial Group echoes the sentiment that current employment figures make a steep rate cut less justifiable. Jeffrey Roach from LPL Financial predicts continued economic growth above trend, foreseeing a series of minor rate reductions.
**Commodity and Currency Markets**
Crude oil futures have ascended by $1.21 to $75.59 a barrel, following a previous increase. In contrast, gold futures have marginally risen by $1 to $2,668.80 an ounce after a previous decline. On the currency exchange, the U.S. dollar is positioned at 148.18 yen, while it trades at $1.0975 against the euro.
**Asia**
Asian markets climbed on Monday, bolstered by strong U.S. jobs data that suggests economic resilience. This development tempered expectations for sharp Federal Reserve rate cuts. Following Friday's robust employment report, investors have adjusted their predictions, now anticipating only a minor rate cut at the Fed's upcoming November 7 policy meeting.
U.S. Treasury yields hit a two-month peak, impacting interest in precious metals. In Asian trading, oil prices increased amidst geopolitical tensions, as Israel launched strikes in Lebanon and the Gaza Strip.
Markets in China are set to reopen post-Tuesday following the Golden Week holiday. Meanwhile, Hong Kong’s Hang Seng Index rose 1.6% to reach a 32-month high, propelled by favorable projections from major financial firms regarding China's economic prospects.
Japanese markets led regional gains, with the yen depreciating against the dollar. Authorities in Japan cautioned against speculative activities in the currency market, contributing to fluctuations. The Nikkei 225 Index increased by 1.8% to 39,332.74, supported by financials like Resona Holdings, climbing alongside tech companies such as SoftBank Group. South Korea's Kospi also experienced notable gains, fueled by strengths in the semiconductor and battery sectors.LG Energy Solution experienced a significant surge, rising by 4.1%, driven by optimism surrounding Tesla's anticipated unveiling of its long-awaited robotaxi initiative.
In Australia, the financial markets made notable gains despite being affected by a regional public holiday. The S&P/ASX 200 Index increased by 0.7% to reach 8,205.40, primarily bolstered by financial and technology sectors. Similarly, the All Ordinaries Index advanced, closing 0.7% higher at 8,479. Conversely, in New Zealand, the S&P/NZX-50 Index saw a slight decline, dropping 0.2% to 12,596.87.
**Europe**
European stock markets faced a subdued session on Monday, weighed down by the impact of elevated bond yields in response to robust U.S. employment data released the previous week. Additionally, sentiment was affected by data revealing a more substantial than anticipated decrease in German factory orders during August. According to preliminary figures from Destatis, new orders fell by 5.8% month-over-month in August, reversing a revised 3.9% increase from July and contrasting with expectations of a 1.9% decline. This marked the most significant reduction since January's 10.9% drop. Separately, Eurostat reported that retail sales volumes in the Eurozone increased by 0.2% month-on-month in August, aligning with market expectations.
The pan-European STOXX 600 Index declined by 0.3% to 516.91, following a 0.4% gain on the previous Friday. Germany's DAX fell by 0.5%, France's CAC 40 decreased by 0.2%, while the U.K.'s FTSE 100 remained relatively unchanged, albeit with a slight positive inclination.
Telecom Italia S.p.A. witnessed a 1.3% decline after its board authorized CEO Pietro Labriola to negotiate an exclusive offer for TI Sparkle S.p.A., presented by the Ministry of Economy and Finance and Retelit S.p.A. In contrast, Richemont, the owner of Cartier, rose by 0.6% following its decision to sell the digital business Yoox Net-a-Porter to online retailer Mytheresa. Sirius Real Estate dropped 1.1%, although it reported a 14.9% increase in its rent roll for the first half of the year, partly due to an ongoing asset acquisition program.
3i Infrastructure saw a 1% increase after receiving a binding offer for its approximately 33% stake in Valorem, a European renewable energy developer, from AIP Management P/S and other co-investors. Heidelberg Materials gained 0.5% following reports of India's Adani Group engaging in talks to acquire its Indian cement operations in a deal valued at approximately $1.2 billion.
**U.S. Economic News**
In the United States, Federal Reserve developments include Minneapolis Fed President Neel Kashkari's participation in a moderated Q&A session at the Bank Holding Company Association Fall Seminar at 1:50 PM ET. Additionally, the Federal Reserve is scheduled to release its report on consumer credit for August at 3 PM ET, with expectations for a $12.0 billion increase.
Atlanta Fed President Raphael Bostic will lead a discussion on "Dynamic Business of Professional Sports" at the Atlanta Fed's Leading Voice Series event at 6 PM ET. Meanwhile, St. Louis Fed President Alberto Musalem is due to engage in a conversation addressing the U.S. economy and monetary policy before the Money Marketeers of New York University Inc. at 6:30 PM ET.
