US stock futures are expected to start the new quarter relatively stable. This comes in the wake of concerns over an averted government shutdown and amid contemplations over China’s economic growth prospects.
S&P 500 and Dow Jones Industrial Average futures have given up earlier gains and remain around the baseline. In contrast, the tech-heavy Nasdaq 100 is showing a steeper rally, up 0.17%.
Over the weekend, Congress managed to negotiate a last-minute deal, averting what appeared to be an imminent government shutdown. This development has brought a sense of relief to investors who were worried about the possible adverse impacts on the economy and the stock market. However, this respite may be fleeting, as the agreement simply temporarily extends budget deliberations.
However, major market indices continue to face other challenges that contributed to substantial losses in the previous quarter. The Federal Reserve’s strong message about sustained high interest rates resonates in the minds of investors. At the same time, rising oil prices and Treasury yields continue to exert pressure.
The funding deal in the US may fuel speculation about an imminent rate hike by the Federal Reserve in November, according to some market participants. Clues to this matter may emerge when central bank Chairman Jerome Powell participates in a roundtable discussion today with Philadelphia Federal Reserve President Patrick Harker.
Separately, the World Bank has cut its growth projection for China in 2024, although it maintained the forecast for 2023, raising concerns about demand in the world’s second-largest economy. The bank cites the lack of full recovery from the impact of the pandemic and the persistent debt crisis in the real estate sector.
In context, the United Auto Workers strike continues to cast a shadow over the markets, extending its reach to more Ford and GM plants. The upcoming delivery reports from automotive companies for the quarter will be closely examined to assess the repercussions of these labor disputes. An agreement between the UAW and Mack Trucks on Sunday could inject a note of optimism.
Additionally, investors are eagerly awaiting the release of the US September employment report on Friday. Monday’s agenda also includes updates on US manufacturing from ISM and S&P Global.
In the futures trading space, a sense of stability prevails as the new quarter progresses. Tech stocks are signaling a slightly elevated open on Monday, with other major indices hovering just above equilibrium. S&P 500 futures show a marginal increase, while Dow Jones Industrial Average futures show a slight decline. However, Nasdaq 100 futures show a stronger rally.
Also read: World Bank maintains China’s growth forecast for 2023 and adjusts outlook for 2024 due to weakness in the real estate sector