S&P Futures on the Rise Ahead of FOMC Meeting Minutes and U.S. PPI Data

U.S. PPI Data

December S&P 500 futures (ESZ23) are showing a positive trend, up by 0.32% this morning as investors eagerly await the release of the Federal Reserve’s September policy meeting minutes and brace themselves for significant U.S. Producer Price Index (PPI) data.

In the previous trading session, Wall Street witnessed a bullish surge, with the S&P 500 and Nasdaq 100 reaching 2-1/2 week highs, and the Dow achieving a 2-week high. Truist Financial Corp (TFC) stole the show, soaring over 6% and becoming the top gainer on the S&P 500, following reports that the bank is in discussions to sell its insurance brokerage unit to Stone Pont for an estimated $10 billion. Hyatt Hotels Corporation (H) also stood out with a gain of about 6% after S&P Dow Jones Indices announced its inclusion in the S&P MidCap 400 Index to replace National Instruments. Meanwhile, PepsiCo Inc (PEP) reported better-than-expected Q3 organic sales and raised its annual profit forecast for the third time this year, resulting in a more than 1% increase in its stock price. On the flip side, Juniper Networks Inc (JNPR) saw a decline of over 1% after a downgrade to Neutral from Overweight by JPMorgan Chase.

Atlanta Fed President Raphael Bostic stated that, in his view, there’s no need for the U.S. central bank to continue raising interest rates, and he does not foresee an impending recession. Fed Governor Michelle Bowman, in her speech on Wednesday, acknowledged progress in taming inflation but emphasized that inflation continues to exceed the FOMC’s 2% target. She also pointed out strong domestic spending and persistent labor market tightness, suggesting that the policy rate may need to rise further and remain restrictive to align with the FOMC’s inflation target.

The market is currently pricing in a 13.7% chance of a 25 basis point rate hike at the November meeting and a 25.3% probability of a 25 basis point rate increase at December’s monetary policy meeting.

Furthermore, U.S. Treasuries have seen an uptick in demand due to escalating tensions in the Middle East.

Today, investors will keep a close watch on the release of the Federal Reserve’s minutes from the September meeting to glean insights into whether policymakers are leaning towards another interest rate increase by year-end. The U.S. Producer Price Index (PPI) is also in focus, with economists expecting September PPI to stand at +0.3% month-on-month and +1.6% year-on-year. The Core PPI readings are expected to be +0.2% month-on-month and +2.3% year-on-year.

Additionally, speeches from Atlanta Fed President Raphael Bostic and Fed Governor Christopher Waller are anticipated.

In the bond market, the yield on the United States 10-year Treasury note stands at 4.562%, representing a 1.96% decrease.

Meanwhile, in the Euro Stoxx 50 futures market, a slight decline of 0.31% is observed this morning. Disappointing corporate news has tempered optimism about interest rates and China’s economic stimulus outlook. Luxury stocks had a rough day, with LVMH (MC.FP) falling over 6% despite posting a 9% increase in Q3 revenue, indicating a slowdown in growth as post-pandemic spending eases. Other major French luxury companies, Hermes Intl (RMS.FP) and Kering (KER.FP), also experienced declines exceeding 2%. On a separate note, German inflation saw a significant decrease in September, aligning with preliminary estimates and reaching its lowest point since the outbreak of the war in Ukraine. Novo Nordisk A/S (NOVOB.C.DX) enjoyed a gain of over 3% following its announcement of ending a trial on Ozempic for treating kidney failure in diabetic patients due to promising results in an interim analysis.

German CPI data for September was also reported, coming in at +0.3% month-on-month and +4.5% year-on-year, in line with expectations.

Asian stock markets displayed positive performance today, with China’s Shanghai Composite Index (SHCOMP) closing up by 0.12%, and Japan’s Nikkei 225 Stock Index (NIK) closing up by 0.60%. The Shanghai Composite reportedly rose due to expectations of fresh stimulus measures by the Chinese government to reach this year’s official growth target. In addition, passenger vehicle sales in China increased by 4.7% in September year-on-year, driven by purchases of discounted and new models. In Japan, dovish comments from Federal Reserve officials spurred a rally in chip-related stocks, pushing the Nikkei 225 to a 2-week high.

Featured Image: Freepik @ sergeychuyko

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