(Bloomberg) — US equity-index futures edged lower as more Americans than expected filed for unemployment support. Markets remained in the grip of volatility as the OPEC+ alliance’s plan to cut oil supply stoked inflation fears.
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Futures on the S&P 500 posted small losses, signaling a muted opening for New York markets. US crude futures held on to weekly gains of about 10% after the oil cartel said it would cut daily output by 2 million barrels. Treasuries swung between gains and losses. In New York premarket trade, Twitter Inc. lost more 2%, falling further below Elon Musk’s offer price.
While higher energy prices risk stoking inflation, some investors speculated they’ll reduce demand and hit company earnings — potentially encouraging the Federal Reserve to slow monetary tightening. Such expectations fueled equity gains this week, but several money managers are already cautioning that the economic path to a less aggressive Fed could be painful.
“If you want to preempt the Fed, you are playing a very high-stakes game,” said Kenneth Broux, a strategist at Societe Generale SA. “The Fed do not want financial conditions to loosen; they don’t want equity markets to take off and get too comfortable.”
Applications for US unemployment insurance rose more than expected last week, in the latest sign that labor demand may be beginning to moderate. Initial unemployment claims increased by 29,000 to 219,000 in the week ended Oct. 1, Labor Department data showed Thursday. That helped to reduce the bearish overhand from European hours, leading to US index futures trading little changed.
West Texas Intermediate futures traded just under $88 a barrel, while Brent crude held just above $93. The output-cut plan drew a warning from the White House about negative effects on the global economy. Goldman Sachs Group Inc. increased its fourth-quarter price target for Brent to $110 a barrel.
In Europe, the Stoxx 600 drifted 0.2% lower, as losses for energy and commodity stocks offset advances in auto-parts and technology shares. Shell Plc tumbled 4.3% after the energy giant pointed to a weaker third-quarter performance.
Fed officials have been at pains to stress that market anticipation of rate cuts next year is misplaced, a point San Francisco Fed President Mary Daly reiterated in an interview on Bloomberg Television. The bank aims to keep policy tight to secure 2% inflation, she added.
The dollar advanced. Britain’s pound shed 0.5% after Fitch Ratings lowered its outlook on the nation to negative. Ten-year gilt yields jumped as much as 18 basis points.
Key events this week:
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US initial jobless claims, Thursday
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Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
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US unemployment, wholesale inventories, nonfarm payrolls, Friday
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BOE Deputy Governor Dave Ramsden speaks at event, Friday
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Fed’s John Williams speaks at event, Friday
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Some of the main moves in markets:
Stocks
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Futures on the S&P 500 fell 0.3% as of 8:22 a.m. New York time
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Futures on the Nasdaq 100 fell 0.3%
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Futures on the Dow Jones Industrial Average fell 0.3%
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The Stoxx Europe 600 fell 0.3%
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The MSCI World index was little changed
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.3% to $0.9858
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The British pound fell 0.6% to $1.1256
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The Japanese yen was little changed at 144.71 per dollar
Cryptocurrencies
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Bitcoin rose 1.1% to $20,211.03
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Ether rose 1.7% to $1,368.84
Bonds
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The yield on 10-year Treasuries advanced one basis point to 3.77%
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Germany’s 10-year yield was little changed at 2.03%
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Britain’s 10-year yield advanced 13 basis points to 4.16%
Commodities
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West Texas Intermediate crude was little changed
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Gold futures rose 0.3% to $1,725.60 an ounce
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