US Futures Drop After S&P 500 Record; SAP Tumbles: Markets Wrap

By Pune Media On Sep 25, 2024 40

(Bloomberg) — US stock futures ticked lower after the S&P 500 finished with its 41st record close this year. Treasuries and the dollar steadied.

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Contracts on the S&P 500 pointed to a drop of 0.2% for the underlying index, while Europe’s Stoxx 600 gauge fell 0.1%. SAP SE slid 4% on news the German software developer and other companies are being probed by US officials for potentially conspiring to overcharge government agencies over the course of a decade.

Traders are seeking fresh catalysts after last week’s half-point Federal Reserve interest-rate cut spurred risk appetite and set the dollar on track to erase its gains this year. The latest policy moves from China on Wednesday aren’t rippling beyond Asian markets as investors question whether the steps will are enough to support the country’s flagging economy.

“What the market is digesting is whether it is sufficient to change the outcome of china’s balance sheet recession,” said Guy Miller, chief market strategist at Zurich Insurance Co. “Really potent fiscal as well as monetary policy is needed to change direction of travel. So far that direction of travel has not changed.”

Central banks are in focus in Europe, with Sweden’s Riksbank cutting borrowing costs and hinting at further reductions in coming months. A policy decision is also due in the Czech Republic.

A darkening outlook for the region has fueled bets the European Central Bank will reduce rates again next month, while economists at HSBC Holdings Plc predict policy makers will start cutting interest rates at every meeting between October and April.

“The worry has been that all the economic data is looking quite shaky,” said Anwiti Bahuguna, global asset allocation CIO at Northern Trust Asset Management, where the region’s stocks have been cut to market weight from overweight.

“At the beginning of the year we did think we would see a nice uptick but it started to slow down way more than any of us anticipated,” she told Bloomberg TV.

Weak Sentiment

Weak US consumer sentiment data weighed on the S&P 500 before Nvidia Corp lifted the gauge to its latest record on Tuesday. The report also flagged concerns about a slowdown in the labor market while manufacturing data also came in weaker than expected.

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“The decay in the perceptions of jobs available was striking,” said Carl Weinberg, chief economist at High Frequency Economics. “It also will deliver a warning message about the state of the economy to financial markets.”

Swaps traders increased their wagers to more than three-quarters of a point of policy easing by year-end from the Fed, suggesting at least one more major US cut is in store, after the data.

Now, investors are awaiting comments from Fed Chair Jerome Powell on Thursday as well as data on the Fed’s preferred price metric on Friday for further clues on the depth of future reductions.

China Rally

China’s stocks rallied for a sixth day after the central bank on Wednesday lowered the interest rate charged on its one-year policy loans by the most on record, the latest measure after its wide-ranging stimulus package announced the day before.

Iron ore climbed and gold hit another record earlier in the session.

Key events this week:

ECB President Christine Lagarde speaks, Thursday
US jobless claims, durable goods, revised GDP, Thursday
Fed Chair Jerome Powell gives pre-recorded remarks to the 10th annual US Treasury Market Conference, Thursday
China industrial profits, Friday
Eurozone consumer confidence, Friday
US PCE, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.1% as of 5:37 a.m. New York time
Nasdaq 100 futures fell 0.3%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 fell 0.1%
The MSCI World Index was little changed

Currencies

The Bloomberg Dollar Spot Index rose 0.2%
The euro was unchanged at $1.1180
The British pound fell 0.3% to $1.3371
The Japanese yen fell 0.7% to 144.18 per dollar

Cryptocurrencies

Bitcoin fell 0.7% to $63,803.21
Ether fell 0.9% to $2,626.56

Bonds

The yield on 10-year Treasuries advanced two basis points to 3.75%
Germany’s 10-year yield advanced one basis point to 2.16%
Britain’s 10-year yield was little changed at 3.95%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson, Zhu Lin, Winnie Hsu and Sujata Rao.