US Stock Futures Gain on China Inflation, Fed Cut Bets as Trade Tensions Simmer

US Stock Futures Edge Higher: China Core Inflation Hits Key Milestone

US stock futures edged higher in early trading on Wednesday, October 15, as inflation numbers from China lifted sentiment.

China’s core inflation rate rose 1% year-over-year in September, suggesting easing deflationary pressures. CN Wire reported:

“This marks the fifth consecutive month of expansion and the first time in 19 months that the growth rate returned to 1%.”

Upward price trends for healthcare (1.1%), clothing (1.7%), necessities & services (2.2%), and other (9.9%) sent core inflation to the 1% mark. However, a 2.6% drop in prices for food, tobacco, & liquor, and a sharp drop in prices for transportation & entertainment, weighed on headline inflation. Consumer prices fell 0.3% year-over-year in September, following the 0.4% decline in August.

While core consumer prices signaled a pickup in spending, producer prices also hinted at easing margin pressures. Producer prices declined 2.3% year-on-year in September, following a 2.9% drop in August.

The softer decline in producer prices coincided with September’s surge in imports and exports, indicating an improving demand environment. While US stock futures edged higher, the Hang Seng Index rallied 1.52% in morning trading, with the Mainland’s CSI 300 and Shanghai Composite Index also rising.

However, rising US-China trade tensions capped gains across US stock futures as Beijing and Washington clashed ahead of the looming APEC Summit.

Trump Reignites Trade Jitters

Overnight, US President Trump threatened to end business dealings with China, stating:

“I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act. We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution. As an example, we can easily produce Cooking Oil ourselves, we don’t need to purchase it from China.”

Brian Tycangco, editor at Stansberry Research, downplayed Trump’s threat, stating:

“China’s cooking oil exports to the US of 834k tons is indeed the largest of its markets. But amounts to just 2.4% of total domestic demand and a total export value of just $771m. This is a non-event compared to $12.8 billion in soybean exports to China in 2024.”

Trump’s latest comments followed the introduction of port fees on Tuesday, October 14, targeting cargo shipments.

US Stock Futures React to Trade Tensions and Fed Rate Cut Bets

US stock futures posted gains in early trading on Wednesday, October 15. The Dow Jones E-mini gained 46 points, the Nasdaq 100 E-mini advanced 33 points, and the S&P 500 E-mini rose 7 points. The continued escalation in the US-China trade war capped the gains.

However, rising bets on back-to-back Fed rate cuts in October and December bolstered demand for US stock futures. According to the CME FedWatch Tool, the chances of 25-basis-point Fed rate cuts in October and December stand at 95.7% and 94.5%, respectively. Crucially, the probability of a December cut has jumped from 82% on October 7.

Corporate Earnings and Fed Speakers in the Spotlight

Later on Wednesday, Fed speakers and corporate earnings will influence risk appetite. Growing concerns about a cooling US labor market could signal more aggressive Fed rate cuts, raising demand for US stock futures. On the other hand, calls to delay rate cuts to assess consumer price trends may weigh on sentiment.

While Fed speakers will influence market mood, corporate earnings will also play a critical role. Bank of America (BAC), Morgan Stanley (MS), and United Airlines (UAL) are among the big names to release earnings results.

Despite these US-China trade tensions, technical indicators show underlying momentum remains bullish.

Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500

Following the morning gains, US stock futures traded above the 50-day and 200-day Exponential Moving Averages (EMAs), reaffirming bullish momentum.

However, the near-term outlook remains dependent on US-China trade headlines, the Senate vote, the Fed’s policy stance, and corporate earnings. Key levels traders should monitor include:

Dow Jones

• Resistance: 47,000, the October 3 record high of 47,323.
• Support: 46,500, 46,000, the 50-day EMA (45,863).

Nasdaq 100

• Resistance: 25,000, October 9 record high of 25,394, 25,500.
• Support: 24,500, the 50-day EMA (24,241).

S&P 500

• Resistance: 6,750, October 9 record high of 6,812, 7,000.
• Support: 6,600, the 50-day EMA (6,585).

October Market Outlook: China, Capitol Hill, and Earnings in Focus

US stock futures may face another choppy session midweek as trade policies, earnings, and the Fed remain in focus.

Fed support for multiple rate cuts, upbeat earnings, and easing trade tensions could send US stock futures toward their October record highs.

However, US stock futures could give up early gains if trade tensions intensify and earnings disappoint.

Follow our live coverage and consult the economic calendar for real-time market updates.