U.S. stock futures are mixed in premarket trading Wednesday, with traders sitting on their hands ahead of key consumer price index inflation data due today.
Yesterday’s weaker-than-expected producer price index figures lifted markets, boosting hopes the Federal Reserve will start to cut interest rates in September. Today’s figures could cement that sentiment.
In the meantime, eyes will be on any further developments on the Israel-Hamas conflict.
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U.S. stock futures were mixed on Wednesday, with traders sitting on their hands ahead of key inflation data. In the meantime, eyes will be on any further developments on the Israel-Hamas conflict.
Dow Jones Industrial Average futures were up 27 points, or 0.1%. S&P 500 futures were flat and Nasdaq 100 futures were down 0.1%.
After racking up major gains on Tuesday on the back of a cool reading for producer prices, markets are likely to take a breather on Wednesday until the main event with the release of the U.S. consumer-price index figures for July at 8:30 Eastern time.
At the moment, investors look to be taking a positive view of the Federal Reserve’s ability to cool inflation without sending the economy into a recession. Still, the volatility of recent weeks suggests there could be a sharp reaction to any surprise in the CPI data.
The pace of inflation in July is expected to hold steady at 3%, the same rate recorded in June, according to economists surveyed by FactSet. However, the monthly pace of overall inflation is expected to pick up to 0.2%, after recording an outright decline of 0.1% in June.
“An upward surprise would be the most worrisome outcome, as this would put the Fed in a very awkward position. Hot inflation with a slowing economy could trigger another risk-off event and a flight to safety. In this case, however, bonds are not likely to be on the winning end,” wrote Benjamin Schroeder, senior rates strategist at ING, in a research note.
The yield on the benchmark 10-year Treasury note stood at 3.850% early on Wednesday, broadly flat from the previous day.
Elsewhere, eyes will still be on the Middle East as Israel braces for an attack from Iran and its ally Hezbollah. The U.S. is sending top officials to the Middle East as it presses for a fresh round of talks between Israel and Hamas this week to reach a cease-fire deal.
A more widespread conflict between Israel and Iran would likely drive up oil prices and cause a flight to safety from risk assets.
By
Giulia Petroni, Dow Jones Newswires
Oil prices were rebounding amid reports that U.S. crude stocks fell for the seventh consecutive week and weaker-than-expected producer-price index data boosting hopes of a September interest-rate cut.
Brent crude and WTI were both 0.4% higher at $81.02 and $78.71 a barrel, respectively, after settling lower in the previous trading session due to demand concerns.
According to reports citing figures from the American Petroleum Institute ahead of official inventory data, U.S. crude stocks fell by 5.2 million barrels last week.
Traders now await consumer-price index data set to be released later in the day for more clues on the Federal Reserve’s next policy move.
Prices also continue to be supported by a higher geopolitical risk premium, but further gains are capped by persistent concerns over softening demand in China.
Chinese shares ended lower as investors brace for key economic data including retail sales, industrial output and fixed assets investment due on Thursday.
Dongfang Electric Corporation dropped 9.9%, the top decliner on the CSI300. Yifeng Pharmacy Chain dropped 4.6%. Meanwhile, Kunlun Tech led the gains, up 4.9% and Foxconn Industrial Internet closed 2.9% higher after its parent company Foxconn released 2Q earnings.
The benchmark Shanghai Composite Index closed 0.6% lower at 2850.65, the Shenzhen Composite Index fell 0.9% and the ChiNext Price Index closed 1.4% lower.
