S&P 500 Poised for Weekly Drop After Yield Spike: Markets Wrap

S&P 500 futures were little changed, with the index heading for its first weekly drop in seven as rising borrowing costs put a chill on investor sentiment.

(Bloomberg) — S&P 500 futures were little changed, with the index heading for its first weekly drop in seven as rising borrowing costs put a chill on investor sentiment.

The US stocks benchmark is set for an almost 1% loss in the week after a surge in Treasury yields fueled risk-off moves across markets as traders scaled back expectations for Federal Reserve rate cuts. Even after paring some of the advance, Treasury yields are still up around 10 basis points in the week.

Europe’s Stoxx 600 index edged lower as analysts parsed the latest raft of company results, with French Cognac maker Remy Cointreau SA and Italian energy giant Eni SpA cutting guidance.

Traders looking ahead to economic data next week including a monthly payrolls report for clues on the future scope of policy easing by the Fed. A US presidential vote that’s too close to call on Nov. 5 is also weighing, with some analysts warning that the trade tariffs and tax cuts favored by Donald Trump could reignite inflation.

Corporate Highlights: 

• Remy Cointreau slashed its annual sales guidance on weak demand in the US and China where consumers continue to cut spending.
• Eni lowered profit guidance for the year, reflecting a worsening oil-price outlook, even as third-quarter earnings beat analyst estimates.
• Electrolux reported operating profit for the third quarter that missed the average analyst estimate.
• NatWest Group Plc raised its outlook for the year after earnings beat estimates in the third quarter.
• Mercedes-Benz Group AG plans to step up cost improvement measures after fierce competition and weaker demand in China hit the luxury-car maker’s profits.
• Thames Water Utilities Ltd. unveiled a proposal on Friday that seeks to raise up to £3 billion ($3.9 billion) from its creditors to buy it more time to avoid going into special administration early next year.

In Asia, the yen was stuck in a range against the dollar ahead of the weekend’s election that may see Japan’s ruling coalition lose its majority in the lower house of parliament for the first time since 2009. Such an outcome would weaken the yen and Japanese stocks, according to strategists.

China’s central bank kept its one-year policy rate unchanged, after slashing funding costs by the most on record a month ago, suggesting authorities are cautiously pacing monetary stimulus to support the economy. 

Chinese Stimulus Insufficient to Curb Deflation Risks, IMF Says

Oil resumed its advanced after a two—day drop, with traders keeping their focus on geopolitical developments in the Middle East and the supply outlook.

Key events this week:

• US durable goods, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.3% as of 8:17 a.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index fell 0.2%
• The MSCI Emerging Markets Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0822
• The Japanese yen was little changed at 151.91 per dollar
• The offshore yuan fell 0.1% to 7.1334 per dollar
• The British pound was little changed at $1.2967

Cryptocurrencies

• Bitcoin fell 1% to $67,476.02
• Ether fell 2.2% to $2,481.16

Bonds

• The yield on 10-year Treasuries declined three basis points to 4.18%
• Germany’s 10-year yield declined two basis points to 2.25%
• Britain’s 10-year yield declined three basis points to 4.21%

Commodities

• Brent crude rose 0.6% to $74.84 a barrel
• Spot gold fell 0.2% to $2,730.14 an ounce

This story was produced with the assistance of Bloomberg Automation.

—With assistance from David Finnerty, Catherine Bosley and Richard Henderson.