Growth in US Stock Index Futures Supported by China Reopening and Reduction in Rate Hike Concerns
- Shams ul Zoha
- January 9, 2023
- 5:49 pm
WHAT YOU SHOULD KNOW
- U.S. stock index futures rose slightly on Monday as expectations of China reopening and a slowing labor market raised the possibility of a slower rate of rate hikes by the U.S. Federal Reserve.
- On Friday, the S&P 500 and the Nasdaq ended four weeks of losses.
- The U.S. Labor Department’s consumer prices index (CPI) report is anticipated to demonstrate that prices rose by 6.5% year-over-year in December. U.S. jobs figures exceeded expectations last week, but wage growth was slightly lower than anticipated.
On Monday, US stock index futures rose slightly due to expectations that China would reopen its borders, as well as indications that the labor market was slowing, which raised the possibility of a slower rate of rate hikes by the US Federal Reserve.
At the end of the week, Wall Street was in a more positive mood following news that the average earnings in December had increased by less than anticipated and services activity in the US had decreased. This came after the Federal Reserve had raised rates at a faster rate than in the 1980s, causing a downturn in the markets earlier in the year.
On Friday, the S&P 500 (.SPX) and the Nasdaq (.IXIC) ended four weeks of losses as investors anticipated that the US economy’s deceleration could lead the Federal Reserve to adopt a more accommodative approach to future monetary policy decisions.
Thursday’s inflation report will give us more information about the level of inflation and what the future holds for interest rates.
According to the US Labor Department, the consumer prices index (CPI) report is anticipated to demonstrate that prices rose by 6.5% year-over-year in December, a decrease from the 7.1% increase seen in November.
At the end of last week, US jobs figures exceeded expectations, indicating that the labor market is still strong. Despite this, investors have shifted their focus to the fact that wage growth was slightly lower than anticipated, according to Russ Mould, investment director at AJ Bell.
Sentiment remains delicate, and Thursday’s US inflation figures could be a crucial gauge of investor trust. This week, investors will pay close attention to the weekly jobless claims and the University of Michigan’s consumer sentiment report for further insight into the state of the U.S. economy.
Shares of Alibaba Group Holding Ltd, which are listed in the United States, saw a 4.8% increase in premarket trading following the announcement that Jack Ma, the founder of Ant Group, will relinquish control of the Chinese financial technology company as part of its restructuring.
Shares of Chinese companies Baidu Inc and Pinduoduo Inc (PDD.O) experienced a 1.5% and 2.7% increase in value, respectively, as the reopening of China’s borders since the start of the pandemic raised expectations of a strong economic rebound in the country.
At the end of the week, two of the biggest banks in the United States, JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N), will begin their quarterly earnings reports.
At 6:21 a.m. Eastern Time, the Dow Jones Industrial Average futures were trading 0.26% higher, the S&P 500 futures were up 0.32%, and the Nasdaq 100 futures had gained 0.27%.
Tesla Inc (TSLA.O) saw a 1.5% rise in its stock as the electric-vehicle manufacturer showed that there are longer waiting times for some versions of the Model Y in China, indicating that the price reductions announced recently could be stimulating demand in the company’s second-largest market.
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