London, – Wall Street is set to open higher on Monday, with U.S. stock futures pointing to gains despite global equities hovering near four-week lows. Investors remain divided on the outlook for U.S. and global economic growth, adding volatility to markets.
The MSCI World Index, a broad gauge of global equities, dipped by 0.24%, falling to its lowest level in nearly a month. In contrast, U.S. markets showed signs of recovery, with S&P 500 futures rising 0.8% and Nasdaq futures climbing 0.9%.
European stock markets also posted gains, with the STOXX 600 index increasing by roughly 0.7%. Most regional markets, including the FTSE 100, DAX, and CAC 40, followed suit, all up by around 0.7-0.8%.
Attention in Europe this week is focused on the European Central Bank’s (ECB) rate decision on Thursday. The ECB is expected to ease monetary policy by another 25 basis points following a similar cut in June. However, the primary concern for global markets remains the health of the U.S. economy, according to Victor Balfour, investment strategist at Rothschild & Co.
“The economic picture in the U.S. isn’t showing signs of a major slowdown, even though there are some signs of cooling,” Balfour noted in an interview with Reuters.
Investors are closely watching U.S. Federal Reserve policy after a mixed August payrolls report left traders speculating on the size of potential interest rate cuts. Markets currently suggest a 30% chance of a larger-than-expected 50 basis point rate cut at the Fed’s next meeting, although some Fed officials have left room for more aggressive action.
Barclays economist Christian Keller highlighted that while the U.S. labor market is cooling, there is no clear sign of a rapid deterioration that would warrant such a significant rate cut. “We don’t see the appetite for a large cut in the Fed’s communications either,” Keller said.
U.S. consumer price data due on Wednesday could further influence the debate, with inflation expected to slow to 2.6%, down from 2.9% in July.
In bond markets, yields for both U.S. and eurozone government bonds rose after last week’s declines. The U.S. 10-year Treasury yield climbed 4 basis points to 3.75%, and the two-year yield reached 3.69%.
Meanwhile, the dollar gained ground against the yen, rising over 1% to 143.62 yen. The euro dipped slightly, falling 0.4% to $1.1043.
In Asia, China’s blue-chip index dropped 1.2% as weak producer price data added to concerns about the country’s economic struggles. Japan’s Nikkei index also fell, down 0.5%, weighed down by declining tech stocks.
Oil prices rebounded slightly as a potential hurricane threatened the U.S. Gulf Coast. Brent crude rose by 55 cents to $71.61 per barrel, while U.S. crude climbed 58 cents to $68.25 per barrel, following a significant drop last week due to global demand worries.
Source: Reuters