U.S. stock futures point higher to begin the new trading week, with markets preparing for a parade of key central bank policy meetings around the world. Traders will be keeping a particularly close eye on the U.S. Federal Reserve’s two-day gathering, where policymakers are expected to lay out how they see inflation evolving over the remaining months of 2023. Elsewhere, the potential pricing of initial public offerings from tech groups Klaviyo and Instacart are in focus after chip designer Arm ‘s blockbuster debut.
1. Futures edge higher
U.S. stock futures inched up on Monday, as investors geared up for a key Federal Reserve interest rate decision later in the week.
By 05:13 ET (09:13 GMT), the Dow futures contract had gained 46 points or 0.1%, S&P 500 futures added 7 points or 0.2%, and Nasdaq 100 futures climbed by 24 points or 0.2%.
The Dow Jones Industrial Average managed to eke out a small increase last week, while the broad-based S&P 500 and tech-heavy Nasdaq Composite slipped for the second consecutive week.
Tech stocks led the declines on Friday. Lingering concerns over the broader economic outlook were exacerbated after Reuters reported that Taiwanese chipmaker TSMC had asked its major suppliers to delay the delivery of high-end semiconductor manufacturing equipment.
The news dampened some enthusiasm around British chip designer Arm (NASDAQ:ARM) after its stellar initial public offering (IPO) in New York last week. Shares in the company dipped by 4.5% in their second day of trading, although the stock remained well above its offer price.
2. Fed decision looms large
Attention now turns to the Fed, with the U.S. central bank widely tipped to keep interest rates steady at a range of 5.25% to 5.50% after a two-day gathering set to conclude on Wednesday.
Markets will likely be keen to receive any indications from policymakers about their plans for borrowing costs during the rest of the year. Much will depend on where the Fed sees inflation in the world’s largest economy heading in the coming months. A jump in petrol costs fueled the biggest surge in consumer prices in 14 months in August, although the underlying figure decelerated to its slowest rate in almost two years.
Along with the Fed’s much-anticipated decision, the Bank of England and Bank of Japan are also scheduled to hold policy meetings this week. A cooling U.K. economy may persuade the BOE to unveil one final rate hike in a long-standing tightening cycle, while the BOJ could provide some clues about a possible shift away from an era of ultra-loose policy.
3. Klaviyo to improve IPO price range – Bloomberg News
Marketing and data automation provider Klaviyo is expected to raise the target price range for its upcoming IPO in a regulatory filing today, according to Bloomberg News, in the latest sign that Arm’s bumper debut has helped to reignite the once-dormant market for new listings.
The Boston-based group now plans to improve the price band to $27 to $29 a share, up from its prior proposal to sell 19.2 million shares at $25 to $27 each, unnamed sources familiar with the matter told Bloomberg. Klaviyo would then price the share sale on Tuesday, Bloomberg reported.
The move would mirror a similar decision by grocery-delivery service Instacart, which also increased its proposed IPO price range on Friday. Shares in the company are projected to begin trading this week.
Arm’s stock surged by 25% in its first trading day last Thursday, sparking hopes for a revival in an IPO market that has been hit by economic uncertainty and elevated interest rates.
4. Evergrande shares slump after wealth management staff detained
Shares in China Evergrande Group (HK:3333) fell sharply on Monday after police detained some staff at the embattled property developer’s wealth management unit.
Police in the southern city of Shenzhen, where the company is headquartered, said over the weekend that “public security organs took criminal compulsory measures” against these employees. The statement did not specify how many were detained, the charges they face, or when they were taken into custody.
The stock slipped to by as much as 25% in early morning trading, although it later pared back some of those losses.
Evergrande, the world’s most indebted real estate group with liabilities worth $340 billion, previously delayed a decision on offshore debt restructuring from September to October.
5. Crude prices extend rally as central bank meetings loom
Oil prices climbed on Monday, extending a recent rally that has been driven by expectations for a tighter crude market, while traders also looked ahead to the crucial central bank policy-setting meetings.
The crude benchmarks have risen by over 30% over the past three months in the wake of supply cuts from Saudi Arabia and Russia, which could push the market into a substantial deficit in the fourth quarter.
Meanwhile, investors will be carefully watching this week’s series of interest rate decisions and subsequent statements from policymakers, as well as fresh economic data out of top oil importer China.
By 05:14 ET, the U.S. crude futures traded 0.3% higher at $90.33 a barrel, while the Brent contract gained 0.3% to $94.17.
Fed meeting looms, more tech IPOs ahead, Evergrande slips – what’s moving markets