(Bloomberg) — US equity futures rose as investors’ focus turned from the presidential debate to upcoming price data that may solidify the case for lower interest rates.
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Contracts on the S&P 500 and Nasdaq 100 advanced, suggesting this week’s rally on Wall Street is set to continue. Both indexes are on course for a third quarter of gains amid expectations that signs of faltering economic growth will give the Federal Reserve more room to ease policy this year.
The dollar was steady after an initial “Trump bump” following Thursday’s debate, which raised questions about incumbent Joe Biden’s ability to defeat Donald Trump in the November poll. Trump Media & Technology Group shares jumped more than 11% in premarket trading.
Treasuries retreated, paring gains from the prior session, when lackluster US economic data reinforced speculation the Federal Reserve will cut interest rates this year to prevent a bigger slowdown in the economy. Economists expect the Fed’s preferred inflation gauge, the core PCE Price Index, slowed to an annualized rate 2.6% last month from 2.8%. That would be the lowest reading since March 2021, though it remains above the central bank’s goal for 2% inflation.
US PREVIEW: May PCE Inflation to Offer Welcome News for Fed
“The fundamental question behind the PCE print is whether there will be at least one rate cut this year,” said Mabrouk Chetouane, head of global market strategy at Natixis Global Asset Management. “If it goes in a way the consensus and the Fed aren’t anticipating, then it will be problematic for equity and bond markets alike.”
Among individual movers in US premarket trading, Nike Inc. shares sank more than 14% after the sneaker company’s full-year outlook missed expectations.
A gauge of the dollar hovered near an eight-month high, on track for a sixth weekly gain. The greenback initially rose as markets assessed Trump was the victor in the debate. It’s a foretaste of how markets might react to a second Trump presidency, and suggests the US currency could be a major beneficiary.
“Markets likely extrapolated today’s debate outcome to the actual election outcome in November,” said Carol Kong, a strategist at Commonwealth Bank of Australia in Sydney. “Trump’s policies are likely to add to inflationary pressures and escalate trade tensions, thereby supporting US interest rates and the safe-haven US dollar.”
French Stocks Sink
European stocks pared an early gain, weighed down by a decline in France’s equity benchmark ahead of the weekend’s parliamentary election, which has upended markets across the region. Investors pulled the most money out of European equity funds in almost four months in the week through Wednesday, according to a Bank of America Corp. note citing EPFR Global data.
France’s CAC 40 index dropped 0.5% to a five-month low, and the nation’s bonds underperformed, with the 10-year yield rising to the highest since November. The main concern for investors is that the new French government will drive the country deeper into debt.
“We retain a cautious stance on French financial assets due to the high event risks and the slim chances of meaningful fiscal consolidation, regardless of the election result,” Bank J Safra Sarasin strategists led by Karsten Junius said in a note.
L’Oreal SA fell after the French beauty-products maker said it expects slower growth in the overall beauty market this year. Puma SE and JD Sports Fashion Plc declined, tracking Nike’s slump.
Nokia Oyj shares rose as much as 4.4% after the Finnish mobile-phone company agreed to buy US-listed optical transmission equipment maker Infinera.
A gauge of Asian equities climbed as much as 0.6% with Japanese, South Korean and Chinese shares among the top gainers. Japan’s stock benchmark Topix index was on course for its highest close in 34 years.
Meanwhile, South Africa’s rand soared 1.5% on renewed optimism the country’s two largest parties are moving closer to a power-sharing deal.
In commodities, oil touched the highest level in almost two months, with the market gripped by turmoil in the Middle East and political uncertainty in some of the world’s biggest economies. Gold headed for a third consecutive quarterly gain, the best run since a pandemic-blighted 2020.
Key events this week:
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US PCE inflation, spending and income, University of Michigan consumer sentiment, Friday
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Fed’s Thomas Barkin speaks, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.3% as of 7:31 a.m. New York time
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Nasdaq 100 futures rose 0.4%
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Futures on the Dow Jones Industrial Average were little changed
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The Stoxx Europe 600 was little changed
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The MSCI World Index was little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0701
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The British pound was little changed at $1.2644
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The Japanese yen was little changed at 160.65 per dollar
Cryptocurrencies
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Bitcoin rose 0.4% to $61,677.24
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Ether rose 0.4% to $3,454.45
Bonds
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The yield on 10-year Treasuries advanced two basis points to 4.30%
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Germany’s 10-year yield advanced two basis points to 2.47%
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Britain’s 10-year yield advanced two basis points to 4.15%
Commodities
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West Texas Intermediate crude rose 0.7% to $82.28 a barrel
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Spot gold rose 0.3% to $2,334.96 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika, Alice Gledhill, Chiranjivi Chakraborty and Julien Ponthus.
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