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U.S. equity futures nudged lower in early Monday trading, while the dollar and Treasury yields steadied, as investors looked to defend the market’s solid December rally ahead of a key inflation reading later in the week.
Stocks ended higher on Friday, with fresh all-time highs for both the S&P 500 and the Nasdaq, as a muted November jobs reports cemented the case for a December Federal Reserve rate cut but wasn’t weak enough to suggest a notably slowing labor market over the coming months.
The record spending and travel spree consumers posted over the Thanksgiving weekend also added to bets that the most important segment of the economy will continue to outperform into 2025, supporting the so-called soft landing prospects that are likely to keep markets elevated.
This week’s November inflation report, due prior to the start of trading on Wednesday, will likely confirm that thesis, with investors betting on only modest changes to headline and core price pressures over the penultimate month of the year.
Markets will likely focus on a key November inflation reading later in the week as the solid autumn rally extends into the final trading days of the year.
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Markets are still facing a host of geopolitical risks, however, which could be leaning into gains to start the week, following the collapse of Bashar Al-Assad’s 24-year rule in Syria over the weekend that is likely to create a power vacuum in the already-combustible middle east region.
“Markets are calm in digesting the news that the Assad regime has finally collapsed, in a move that weakens allies Russia and Iran and may yet lead to further shifts in the regional balance of power in the coming days,” said Lindsay James, investment strategist at London-based Quilter Investors.
“Oil prices remain low at around $71 in a week that could see OPEC+ production further cut as weak demand, combined with growing global supplies, have led to price weakness in recent months despite pockets of unrest,” James added.
Global oil prices reflected a portion of that concern, with Brent crude prices rising by 80 cents to $71.92 per barrel in overnight trading, with U.S. WTI futures rising 86 cent toe $68.06 per barrel.
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On Wall Street, futures contracts tied to the S&P 500, which is up just under 1% for the month and 27.7% for the year, suggest a modest 5 point opening bell dip for the bench, with the Dow Jones Industrial Average called 20 points lower.
The tech-focused Nasdaq, which is up 3.3% for the month and riding a year-to-date advance of 32.3%, is priced for a 30 point decline.
Benchmark 10-year Treasury note yields were marked 2 basis points lower from Friday levels at 4.164% while 2-year notes eased to 4.106%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.18% lower at 105.865.
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In overseas markets, state media reports of new stimulus plans in China, including an “appropriate loosening” of monetary policy sent shares in Hong Kong up nearly 2.8% by the close of trading as investors looked to this week’s Central Economic Work Conference of Communist Party officials in Beijing.
That optimism helped lift Europe’s Stoxx 600 to a six week high in mid-day Frankfurt trading, with the benchmark rising 0.1%, while Britain’s FTSE 100 rose 0.24% in London.
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