- US stock futures edged lower on Monday ahead of a busy week of Q3 earnings, with US banks due to report.
- Goldman Sachs cut its US economic growth forecast for 2021 and 2022 again, citing a “virus drag” on consumer spending.
- WTI oil futures topped $80 for the first time since 2014 and Brent surged, as the energy crunch continues.
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US stocks looked set to open lower on Monday in the run-up to the US earnings season, with investors bracing for potentially more downbeat corporate earnings reports, as oil futures built on recent gains to hit fresh multiyear highs.
Futures on the S&P 500 lost 0.3%, while those on the Dow Jones fell 0.2%, and Nasdaq futures slipped 0.4% as of 5:30 a.m. ET, suggesting a lower start to trading later in the day. Monday marks Columbus Day in the US where equity markets will be open, while bond markets will be shut.
Investors will be watching for signs of stress in third-quarter earnings reports this week, after companies took a cautious tone in their outlooks.
“We’ve got a potentially more challenging US earnings season than that seen over the last year will commence with the big financials from Wednesday,” Deutsche Bank strategists said in a note.
Inflationary pressures and the likelihood that central banks will soon start to pull back on support are still in focus for investors, alongside the global supply-chain issues that put the post-pandemic rebound at risk. Labor shortages are weighing on US economic prospects.
San Francisco Fed President Mary Daly said on Sunday that the US job market will continue to be impacted by COVID-19, and the Delta variant in particular, but it’s too soon to say it is “stalling.” While the September jobs report released Friday showed 194,000 new jobs were created, missing the 500,000 consensus estimate, the readings for July and August were revised higher.
Goldman Sachs on Sunday cut its US economic growth forecast to 5.6% for 2021 and to 4% for 2022, due to expectations of a decline in fiscal support and a longer-lasting “virus drag” on consumer spending.
Tuesday’s JOLTS report will be watched for confirmation that US labor problems reflect a lack of supply rather than of demand. An update on US consumer price inflation and Federal Reserve minutes are scheduled for Wednesday.
Oil futures continued their multiweek surge, with West Texas Intermediate moving 2.4% higher to $81.28 a barrel, topping $80 for the first time since late 2014. Brent crude rose 1.9% to $84.03 a barrel, its highest level in three years.
The closure of coal mines due to heavy flooding in China’s Shanxi province has pushed Chinese coal futures up 8%. Soaring prices for coal and natural gas have helped drive oil prices higher in recent weeks as power generators seek alternatives.
“Power concerns continue to offer support to the oil market,” said ING analysts Warren Patterson and Wenyu Yao. “This is a trend we are likely to see continue through the winter.”
In Asia, food-delivery company Meituan was hit with a smaller-than-expected antitrust fine of $530 million, helping send Hong Kong’s benchmark index sharply higher. The Hang Seng rose almost 2%, while the Shanghai Composite was about flat. Tokyo’s Nikkei added 1.6%.
Property market issues persist in China, as developer Modern Land seeks a three-month extension to a $250 million bond due to mature October 25.
In Europe, a Bank of England policymaker said UK households must prepare for an earlier start to higher interest rates. London’s FTSE 100 rose 0.2%. The Euro Stoxx 600 lost 0.2%, and Frankfurt’s DAX fell 0.3%.