US Stock Futures Advance Ahead of US CPI Report
Beyond Asia, US stock futures steadied after Friday’s losses. The Nasdaq 100 E-mini rose 66 points, the S&P 500 E-mini gained 9 points, while the Dow Jones E-mini advanced 38 points.
Market concerns about the US economy losing momentum shifted in the morning session. August’s weaker-than-expected US Jobs Report cemented bets on a September Fed rate cut and fueled expectations of further easing in the fourth quarter. Lower interest rates would reduce borrowing costs, boosting company earnings and lifting share prices.
According to the CME FedWatch Tool, the chances of a September Fed rate cut stood at 100% (August 29: 86.4%). Furthermore, the probability of a 25-basis point rate cut in October rose from 48% (August 29) to 71.6%.
Sentiment toward the Fed rate path limited the effect of weak Chinese exports on US stock futures.
Outlook: Consumer Inflation Expectations in Focus
Later today, US consumer inflation expectation figures will face scrutiny ahead of the highly anticipated CPI Report. Economists expect inflation expectations to remain at 3.1% in August, well below April’s 3.6% high.
A lower reading could support a more dovish Fed rate path. Consumers may delay spending if they expect prices to drop, dampening demand-driven inflation. Under this scenario, US stock futures may extend their gains.
On the other hand, a higher print could temper bets on policy easing in Q4, weighing on risk assets.