US Stock Futures Trim Weekly Drop; Treasuries Gain: Markets Wrap

(Bloomberg) — U.S. stock futures pointed to gains at the Wall Street open as investors looked past a jump in borrowing costs that cooled market sentiment earlier in the week.

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Contracts on the S&P 500 rose 0.3%, suggesting the underlying gauge may pare its first weekly decline in seven weeks. Treasury yields fell for a second day, sending the 10-year interest rate higher by about a tenth of a percentage point in the week.

Traders’ attention is turning to next week’s US economic data, including the monthly jobs report, for new clues about the scope of interest rate cuts by the Federal Reserve. With the November 5 presidential election approaching, some analysts expect the stock market to strengthen if Donald Trump wins, while others warn it could reignite inflation and slow the pace of Fed easing.

“Markets are at least smelling a Republican sweep, and possibly an election/Senate landslide,” Steven Uth, chief investment officer for equities at Fed Hermes, wrote in a note. “If this happens, and we think it very well could happen, we expect the modest rally we have seen since July to gain strength. A Trump win would likely favor old economy financials, industrials, energy and small-cap stocks.

Strategists at Bank of America Corp., led by Michael Hartnett, highlighted other pre-election trades. They said investors continue to buy gold as a hedge against inflation and populism, while other trending themes – such as selling bonds and buying AI stocks – are holding up.

Bank of America’s Hartnett says bets on gold are rising ahead of the US elections

The precious metal hit a record high on Wednesday and gold funds recorded their largest weekly inflow since July 2020, according to Bank of America strategists. The yield on US 10-year government bonds briefly broke 4.2% this week, the highest level since July, while shares of US chip company Nvidia Corp reached an all-time high.

Meanwhile, the European Stoxx 600 index fell on Friday after lackluster results from companies including French cognac maker Remy Cointreau SA and Mercedes-Benz Group AG. The regional stock index is heading down more than 1% during the week.

“It has been a volatile situation,” said Vidya Anant, senior portfolio manager and head of sustainable equity funds in Europe at DWS Asset Management. “We’re seeing a bit of risk-off behaviour, and no one wants to move into stocks at this point especially right before the election.”

The company’s most prominent features:

  • Rémy Cointreau lowered its annual sales guidance due to weak demand in the United States and China as consumers continue to cut spending.

  • Eni cut its earnings guidance for this year, reflecting a deteriorating outlook for oil prices, even as third-quarter earnings beat analysts’ estimates.

  • South Korean prosecutors have accused BNP Paribas SA of violating short-selling rules, according to people with direct knowledge of the matter.

  • Electrolux reported third-quarter operating profits that beat analysts’ average estimates.

  • NatWest Group Plc raised its forecast for the year after profits beat estimates in the third quarter.

  • Mercedes-Benz plans to step up cost optimization measures after fierce competition and weak demand in China hurt the luxury carmaker’s profits.

  • Thames Water Utilities Ltd. revealed. It announced a proposal on Friday seeking to raise up to 3 billion pounds ($3.9 billion) from its creditors to buy more time to avoid going into private administration early next year.

In Asia, the yen remained stuck in a range against the dollar ahead of weekend elections that could see Japan’s ruling coalition lose its majority in the lower house of parliament for the first time since 2009. Such an outcome would weaken the yen and Japanese stocks. According to strategists.

China’s central bank kept its one-year interest rate unchanged, after cutting financing costs by the most on record a month ago, suggesting authorities are cautiously proceeding with monetary stimulus to support the economy.

The International Monetary Fund says Chinese stimulus is insufficient to reduce deflation risks

Oil resumed its advance after a two-day decline, with traders continuing to focus on geopolitical developments in the Middle East and supply expectations.

Main events this week:

Some key movements in the markets:

Stocks

  • S&P 500 futures rose 0.2% as of 7:22 a.m. New York time

  • Nasdaq 100 futures rose 0.2%

  • Dow Jones Industrial Average futures rose 0.2%

  • The Stoxx Europe 600 index fell by 0.2%.

  • The MSCI World Index was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • There was little change in the euro at $1.0824

  • There was little change in the pound sterling at $1.2984

  • There was little change in the Japanese yen at 151.91 to the dollar

Cryptocurrencies

  • Bitcoin fell 0.3% to $67,924.66

  • Ethereum rose 0.1% to $2,538.63

Bonds

  • The yield on the 10-year Treasury note fell 2 basis points to 4.20%.

  • The yield on 10-year German bonds rose one basis point to 2.28%.

  • The yield on British 10-year bonds fell one basis point to 4.22%.

Goods

  • West Texas Intermediate crude rose 0.7% to $70.70 a barrel

  • Gold in spot transactions fell 0.5 percent to $2,722.94 per ounce

This story was produced with assistance from Bloomberg Automation.

–With assistance from David Finnerty, Catherine Bosley, and Richard Henderson.

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