US equity-index futures fell as the OPEC+ alliance’s plan to cut oil supply stoked inflation fears and as traders awaited labor-market data to gauge the risk of recession.
(Bloomberg) — US equity-index futures fell as the OPEC+ alliance’s plan to cut oil supply stoked inflation fears and as traders awaited labor-market data to gauge the risk of recession.
Futures on the S&P 500 and Nasdaq 100 each dropped 0.6%, while Europe’s Stoxx 600 erased an advance. US crude futures held on to weekly gains of about 11% after the oil cartel said it would cut daily output by 2 million barrels. Treasuries were steady, with the two-year rate hovering about the 4.15% level. In New York premarket session, Twitter Inc. traded 7% below Elon Musk’s offer price.
While higher energy prices could stoke inflation, some investors speculated they’ll reduce demand and hit company earnings — potentially encouraging the Federal Reserve to slow monetary tightening. While such expectations fueled equity gains this week, several money managers are cautioning that the economic path to a less aggressive Fed could be painful.
“If you want to preempt the Fed, you are playing a very high-stakes game,” said Kenneth Broux, a strategist at Societe Generale SA. “The Fed do not want financial conditions to loosen; they don’t want equity markets to take off and get too comfortable.”
West Texas Intermediate futures traded near $88 a barrel, while Brent crude held near $93.30. The output-cut plan drew a warning from the White House about negative effects on the global economy. Goldman Sachs Group Inc. increased its fourth-quarter price target for Brent to $110 a barrel.
In Europe, the Stoxx 600 drifted lower as losses for energy and insurance stocks offset advances in real estate and travel shares. Shell Plc tumbled 4.6% after the energy giant pointed to a weaker third-quarter performance.
Investors are wary of placing large-scale equity bets as they await a report on US initial jobless claims later Thursday and the official nonfarm payrolls data Friday. A Bloomberg survey shows the US economy will have added 260,000 jobs last month; a higher-than-anticipated number may spook markets.
Fed officials have been at pains to stress that market anticipation of rate cuts next year is misplaced, a point San Francisco Fed President Mary Daly reiterated in an interview on Bloomberg Television. The bank aims to keep policy tight to secure 2% inflation, she added.
The dollar swung between gains and losses Thursday. Britain’s pound slipped 0.4% and gilt yields rose after Fitch Ratings lowered its outlook on the nation to negative.
Key events this week:
- US initial jobless claims, Thursday
- Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
- US unemployment, wholesale inventories, nonfarm payrolls, Friday
- BOE Deputy Governor Dave Ramsden speaks at event, Friday
- Fed’s John Williams speaks at event, Friday
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Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 0.6% as of 5:56 a.m. New York time
- Futures on the Nasdaq 100 fell 0.6%
- Futures on the Dow Jones Industrial Average fell 0.5%
- The Stoxx Europe 600 fell 0.1%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $0.9891
- The British pound fell 0.4% to $1.1282
- The Japanese yen was little changed at 144.70 per dollar
Cryptocurrencies
- Bitcoin rose 0.7% to $20,136.02
- Ether rose 1% to $1,358.63
Bonds
- The yield on 10-year Treasuries was little changed at 3.76%
- Germany’s 10-year yield was little changed at 2.03%
- Britain’s 10-year yield advanced seven basis points to 4.11%
Commodities
- West Texas Intermediate crude was little changed
- Gold futures rose 0.2% to $1,723.80 an ounce
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