Here are five things you should know for Monday, September 26:
1. – The edge of stock futures contracts lower amid currency market chaos
US stock futures were slightly lower on Monday, while the dollar extended its rally relentlessly upwards, as investors retreated from risky global markets amid widespread currency turmoil and growing fears of a near-term recession.
The value of the pound tumbled overnight, which briefly pushed the British currency to a historic low of 1.0327 in the wake of last week’s “mini-budget” from the new Conservative government, and was echoed by fresh moves in the euro’s downward trend, which hit the euro. The lowest level in 20 years at 0.9689 against the US dollar, and threats of currency intervention from both China and Japan.
The turmoil comes after the Federal Reserve’s rate decision last week, which raised the central bank’s key rate to a range of 3% to 3.25%, and a hawkish expectation of more hikes to come from Chairman Jerome Powell.
The US dollar index, which measures the greenback against a basket of six world currencies, rose 0.005% at 113.196 – a new two-decade high – against a basket of other major currencies, while the benchmark two-year Treasuries and yields rose to 4.274% in overnight trading in anticipation of further Fed rate hikes.
However, the weak growth outlook is putting downward pressure on commodity prices at the same time that central banks are accelerating their hawkish rhetoric, suggesting that investors are adding stagflation risks to their list of near-term concerns about the volatile global economy.
West Texas Intermediate crude futures for November delivery were down 25 cents at $78.49 a barrel in overnight trading, while Brent contracts for the same month were down 65 cents at $85.50 each.
Sentiment was further affected by the results of Italy’s national election at the weekend, which is likely to secure a majority victory for the right-wing coalition led by Giorgia Meloni and her Brotherhood of Italy party.
However, in Europe, the Stoxx 600 Index is down just 0.08% in early Frankfurt trading while the British FTSE 100 Index, whose major components earn the bulk of their revenue outside the UK, added 0.06%.
On Wall Street, futures linked to the S&P 500 are quoting the opening bell down 17 points while futures linked to the Dow Jones Industrial Average are priced at 132 points. Futures contracts related to the technology-focused Nasdaq are pointing to a 33-point move to the downside.
2. – Next week: Fed inflation gauge in focus as prices rise
The key reading of the Fed’s preferred inflation gauge on Friday will highlight a relatively quiet week of economic data and earnings releases as traders head into the final days of September’s tough sell-off.
After the surprisingly hot reading of headline inflation in August, which underpinned the case for the Fed’s third consecutive rate hike by 75 basis points last week, the release of the PCE price index on Friday will be watched closely for any suggestion of easing price pressures in the core reading.
Federal Reserve Chairman Jerome Powell is also scheduled to deliver opening remarks at a banking conference in St. Louis on Tuesday, 7:30 a.m. ET, with three of his colleagues — John Williams, Loretta Meester and Lyle Brainard — scheduled to speak on the day. Friday after the PCE data was released at 8:30 a.m. ET.
Housing data will also be in focus this week, with August’s new and pending home sales figures released on Tuesday and Wednesday, as well as the July update of the Case-Shiller home price index.
A light week for corporate earnings on Thursday will be highlighted by updates from Micron Technology (mo) Before you start trading and Nike (NKE) After the closing bell.
3. – The pound sterling crisis sends the pound to an all-time low against the dollar
Sterling fell to an all-time low against the US dollar on Monday, fueling speculation of an emergency interest rate hike from the Bank of England over the coming days.
Sterling is down as much as 5% against the dollar, extending last week’s currency market dips that followed a “mini-budget” statement from Finance Minister Kwasi Kwarting that included $80 billion in new borrowing – the largest increase since 1972 – to fund every of planned caps on energy prices over the coming winter and tax cuts for high-income earners in the world’s fifth-largest economy.
UK money market trading is now priced at least another 1.75% in near-term interest rate hikes by the Bank of England to defend the currency – which is now trading at 1.0752 – from sliding into parity against the dollar.
4. – Amazon tracks the target at the start of early holiday sales
Amazon (AMZN) Shares were slightly lower on Monday after the world’s largest online retailer said it would hold a shopping event in early October to attract demand from value-focused consumers.
After moving from the target (TGT) Last week to kick off its holiday sales effort a week earlier this year, Amazon said it would host a “Prime Early Access Sale” that begins Tuesday, October 12 and will focus on those with memberships for the retailer’s Amazon Prime membership program.
Deputy Prime Minister Jamil Ghani said: “We are very excited to help Prime members kick off the holiday season with Amazon’s new Prime Early Access Sale. It’s an exclusive opportunity for members to get deep discounts on top brands we know they’re looking for this time of year. the year.”
Amazon shares were down 0.03% in pre-market trading to indicate an opening bell price of $113.75 per share.
5. – Hurricane Ian hits Cuba, heads for Florida’s Gulf Coast
Tropical Storm Ian has accelerated into a hurricane as it makes its way across the western Caribbean with an expected path to hit the Florida Gulf Coast early this week, the National Hurricane Center said Monday.
Hurricane Ian is now centered 90 miles southwest of Grand Cayman Island, and has a maximum wind speed of 75 miles per hour. A Hurricane Watch warning has been issued along the west coast of Florida, including the city of Tampa
“A turn toward the northeast is expected on Tuesday evening or early Wednesday,” the NHC said in its latest update on the storm. “On the forecast track, the center of Ian is expected to pass near or west of the Cayman Islands today, near or over western Cuba tonight and dawn Tuesday.
“Ian will then exit over the southeastern Gulf of Mexico on Tuesday, pass the western Florida Keys late on Tuesday, and approach the west coast of Florida on Wednesday.”