Futures Move Lower, Rate Cut Hopes Fade, Asia Down On Politics

The U.S. Futures Are Moving Lower On Monday

The U.S. futures are moving lower on Monday morning following a stronger than expected NFP Report. The NFP report last Friday shows U.S. job gains were well ahead of expectations and casting a shadow of doubt on FOMC outlook. The Fed said in their statement last month it was ready to act appropriately to ensure continued economic expansion. The market took that to mean a rate cute, possibly by 50 basis points, would happen as soon as this month. The CME FedWatch tool is now showing a near 0% chance of a 50 basis point cut and barely 50% chance for two cuts by the end of the year. The next FOMC meeting is in 23 days.

The index moves are led by the NASDAQ Composite with a loss of -0.35%. The Dow Jones Industrial Average was lower by -0.20% in early trading, the S&P 500 about -0.16%. The second quarter earnings season is about to hit high gear although this week is still light on reports. Big names on the list this week include Best Buy, Fastenal, and L Brands; next week the big banks will be reporting. This week’s economic calendar is also light on events if not on substance. Reports due out this week include the NFIB Small Business Survey, the JOLTs report, the FOMC Minutes, CPI and PPI.

European Markets Flat As Rate Cut Hopes Fade

European indices are flat and mixed at midday on Monday as investors ponder the odds for an FOMC rate cut. The NFP report was a mixed bag in terms of its market effect, strong jobs gains are good news but not for a market betting on easy money policy. Basic resources led today’s action but the 1.0% move is not indicative of broader sentiment. Shares of Arcelor Mittal and Rio Tinto led the group with gains of 1.5%.  The DAX, FTSE 100, and CAC were all hugging the flatline with moves less than 0.10%.

Shares of Enagas fell to the bottom of the rankings after it received a flurry of downgrades. The utility company was downgraded by RBC, JP Morgan, and Kepler Chevraux on concerns of profitability. Shares of Deutsche Bank were also lower in early Monday trading. The German bank says it will exit its global equities sales and trading operations and cut thousands of jobs in an effort to improve profitability.

Asian Markets Move Lower On Political Concerns

Asian markets, led by China, moved lower in Monday trading as geopolitical concerns mount. The strong jobs numbers in the U.S. are only a part of the picture, protesting in Hong Kong and disputes between Japan and South Korea are also to blame. The Shanghai Composite led the rout with a loss of -2.58% and was closely followed by a -2.20% decline in the Kospi. The Hong Kong Hang Seng shed -1.55% with the Australian ASX and Japanese Nikkei close behind.