U.S. stocks are poised for a positive start on Monday as investors renew bets on potential interest rate cuts by the Federal Reserve later this year. Meanwhile, the yen weakens after last week’s suspected intervention by Tokyo to halt its surge, according to Reuters.
Futures indicate a buoyant opening, with the S&P 500 futures adding 0.3% and Nasdaq futures ticking up 0.2%, setting a positive tone for Wall Street’s session following Friday’s U.S. nonfarm payrolls report. The report reignited hopes for a soft landing for the U.S. economy, reinforcing expectations of Fed rate cuts in the near future, particularly after Chair Jerome Powell reiterated the central bank’s easing bias last week.
Economists at Wells Fargo noted that while the jobs market remains tight, it’s not as hot as it was previously, which could lead to a gradual slowdown in inflation. This sentiment supports expectations for further Fed action to stimulate the economy.
Florian Ielpo, head of macro at Lombard Odier Investment Managers, highlighted the significance of the S&P rising beyond the 50-day moving average of 5130, indicating a potential uptrend. However, failure to breach this level could lead to a delay in reaching new highs.
In Europe, Goldman Sachs raised its 2024 EPS growth forecast for STOXX 600 companies to 6% from 3%, attributing the increase to factors like rising Brent prices and a weaker euro/dollar exchange rate.
Market sentiment in Europe remained positive, with mainland China and European markets starting the week on an upbeat note. Europe’s broadest stock index rose 0.7%, reflecting renewed optimism from the U.S.
Oil prices garnered attention amid prospects of Saudi Arabian price hikes and escalating tensions in the Middle East. Brent futures rose 73 cents to $83.69 a barrel, while U.S. crude futures climbed 81 cents higher to $78.92 per barrel.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan reached its highest level since February 2023, with China’s blue-chip index closing 1.5% higher. Hong Kong’s Hang Seng Index, which rose 4.7% last week, continued its winning streak on Monday, closing 0.55% higher.
Investors remained vigilant for further volatility in the yen following last week’s suspected intervention by Japanese authorities. The yen weakened on Monday, partially retracing its gains from last week.
Gold prices edged higher to $2,316 an ounce, indicating investor demand for safe-haven assets amid market uncertainties.
Traders will continue to monitor developments in global markets, particularly regarding Fed policy expectations and currency movements, for potential investment opportunities and risk management strategies.
