U.S. equity futures nudged higher Tuesday, although global markets maintained a cautious tone heading into the third quarter earnings season with a focus on surging energy prices, faster inflation and their combined effect on growth prospects in the world’s biggest economies.
Investors were also unsettled by news that indebted China property giant Evergrande had missed a third series coupon payment in as many weeks, reigniting concerns that its collapse could trigger contagion in regional bond markets.
Beyond that, however, many of the same issues continue to challenge markets this week, with oil prices trading near seven-year highs amid a global power crunch, benchmark 10-year note yields holding at four-month highs ahead of a $38 billion auction later this morning and earnings from JPMorgan , Citigroup and Goldman Sachs kicking-off the start of the third quarter earnings season on Wednesday.
Collective S&P 500 profits are expected to rise 29.6% from last year to around $413.8 billion, according to forecasts from Refinitiv,. The energy sector is expected to lead gains over Q3, with profits rising by nearly 1500% from last year to around $20.5 billion.
September CPI data also looms large on Wednesday as the market’s preferred inflation gauge, the so-called 5-year/5-year breakeven rate, is trading at the highest levels since June and Federal Reserve rate hike bets for September 2022 continue to accelerate.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average are indicating a 5 point opening bell gain, while the broader S&P 500 is priced for a 1 point move to the downside. Nasdaq Composite futures, meanwhile, are set for a 35 point gain as benchmark 10-year note yields eased to 1.603% in early New York trading ahead of today’s debt auction.
Tesla shares were a notable pre-market mover, rising 0.8% after after the carmaker defied a sharp slowdown in China to record its best-ever September sales tally from the world’s biggest car market.
Nike , too, was on the move after analysts at Goldman Sachs initiated coverage of the sportswear giant with a ‘buy’ rating and a $172 price target.
MGM Resorts International shares jumped 2.4% higher after analysts at Credit Suisse boosted their rating on the gaming group and its U.K.-based partner posted stronger-than-expected third quarter revenues.
Oil prices eased from their recent seven-year peaks, but remain firmly elevated heading into today’s API stock release data and the broader Energy Department assessment on Wednesday.
WTI futures for November delivery were marked 32 cents higher at $81.06 per barrel while Brent contracts for December, the global pricing benchmark, were up 33 cents at $83.98 per barrel.
In overseas markets, Europe’s Stoxx 600 slipped 0.1% lower after a key reading of German investor sentiment fell for the fifth consecutive month in September amid concerns over the impact of bottlenecked global supply chains and surging energy prices.
In Asia, the region-wide MSCI ex-Japan index fell 0.88% while Japan’s Nikkei 225 closed 0.94% lower on the session at 28,230.61 points.
This article was originally published by TheStreet.