US Stock Futures Inch Higher Ahead of Key Inflation Data

14 Sep 2021 · 3rd Party Analysis

US Stock Futures Inch Higher Ahead of Key Inflation Data

WRITTEN BY ThorFX

In Summary

  • Stock futures swing around the flat line ahead of Tuesday’s market session
  • Key CPI report to reveal if consumer prices kept rising in August

Futures Aim for a Higher Open

US stock index futures floated little changed in the early morning hours ahead of the regular trading session on Tuesday. Following a largely positive day, futures contracts tied to the major benchmarks were hovering near the flat line, swinging between gains and losses.

Dow Jones Industrial Average futures and S&P500 futures were in the green by around 0.1% to 0.2%. Futures on the Nasdaq Composite kept flat ahead of the bell on Tuesday.

Focus today will be on the latest inflation report from the US. The consumer price index (CPI) will reveal how prices fared for August. Surging inflation in recent months has been a top concern for market participants and a challenge for the US Federal Reserve.

Inflation Report Expected to Surpass 5%

The fresh inflation print expected today will either confirm the Fed’s statement that inflation would come down as the economy progresses, or it would further speed up Fed’s intention to taper.

In recent comments, Fed Chair Jerome Powell has signaled the US central bank views inflation as temporary and a result of one-off factors sprouting from the economic reopening. Once business and consumer activity pick up, Mr. Powell has argued, higher prices will move to lower levels.

Still, consumer prices have climbed steadily over the past few months. In July, consumer prices spiked 5.4% from a year ago, the largest inflation jump since August 2008. Analysts expect the Labor Department to report that today’s prices rose by 5% or more over the last month.

Fed Officials Meet Next Week

A persistent rise in inflation could prompt the Federal Reserve to bring forward its tapering timeline and introduce a reduction in monthly asset purchases as soon as their September meeting.

Fed officials are gathering on Sept. 21-22 to discuss when exactly they should start reversing the easy-money policies, particularly the $120bn in bond buying per month.

As investors await Fed’s meeting next week, stocks wavered on Monday, following a series of losses over the last week. The Dow Jones Industrial Average and the broader S&P500 index pushed higher by 0.8%, and 0.2%, respectively. The Nasdaq Composite declined modestly by less than 0.1% on Monday.

In Europe today, stocks are trading mixed and largely searching for direction. The Stoxx Europe 600 opened on a positive note but later lost momentum and slipped into the red. The pan-European stock average is struggling to move higher and is currently floating sideways near the opening level.

Trading Ideas

The US inflation report could increase the volatility in the US dollar, presenting various trading opportunities in the currency market. Pairs such as the EUR/USD, the USD/JPY, and the USD/CHF could see larger trading volumes than usual.

The Apple launch event today could hold key updates that may sway Apple stock either higher or lower, depending on the news released at the event. Besides the unveiling of the iPhone 13 and the Apple Watch Series 7, investors expect to hear details about smart glasses and cars by the iPhone maker.

In cryptocurrency, the bitcoin community today will monitor fresh comments by the Securities and Exchange Commission Chairman Gary Gensler. Mr. Gensler will speak before the Senate Banking Committee. He will address the need for regulations and investor protection in the crypto space. Ahead of his speech, bitcoin is trading slightly higher on the day, currently above $46,000 per coin.

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