(Bloomberg) — US equity futures fell with European stocks amid a tumble in energy shares, while Treasuries clung to gains from Monday’s rally prompted by signs the US economy is cooling.
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Contracts on the S&P 500 and Nasdaq 100 pointed to declines at the open of Wall Street trading, as investors weigh concerns about America’s economic health against optimism that the Federal Reserve will cut rates in the fourth quarter. BP Plc and TotalEnergies SE dropped at least 3%, dragging Europe’s Stoxx 600 Index down 0.7%.
The 30-year Treasury yield held near 4.53%, the lowest level since May 23, after US manufacturing data out Monday reinforced Fed rate bets.
“At some point weak data should become bad news for risky assets, but we would argue that some point is a few weeks or a couple of months away,” Mohit Kumar, chief strategist for Europe at Jefferies, wrote in a note to clients. “We still remain long risky assets. Initially weaker data could be interpreted as good for risky assets as it increases the probability of a Fed cut.”
Meanwhile, Indian stocks plummeted, erasing $386 billion in market value, as tallies signaled that Prime Minister Narendra Modi’s ruling party was struggling to win a majority of seats in national elections, a stunning result after exit polls showed he was on pace for a landslide victory.
Swap contracts tied to upcoming Fed meetings continue to fully price in a quarter-point rate cut in December, with the odds of a move as soon as September edging up to around 50% and November also given high odds.
Later Tuesday, economists expect figures to show a third consecutive monthly drop in US job openings, while Friday’s payroll numbers loom as crucial in the search for clues about the outlook for the world’s No. 1 economy and interest rates.
In Europe meanwhile, strong economic data and vocal European Central Bank hawks are pushing some analysts and investors to waver in their expectations for rate cuts this year. While most economists still foresee quarterly reductions following an initial move this week, some…
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