By Nell Mackenzie
LONDON (Reuters) -Wall Street looked to open lower on Monday ahead of caution over whether the Federal Reserve’s easing monetary policy might be offset by geopolitical concerns.
U.S. stock futures eased with the S&P and Nasdaq futures both down roughly 0.3%.
President Donald Trump said on Friday that U.S. companies would need to pay $100,000 for new H-1B worker visas, a potential blow for the dominant U.S. tech sector.
Investors will hear from a host of Fed officials this week as markets await the release of the Fed’s favored inflation gauge on Friday.
Luxury carmakers and the region’s banks hampered Europe’s markets on Monday as Porsche and its parent Volkswagen both cut their profit forecasts after delaying the rollout of EV models due to weak demand.
Euro zone banks ticked roughly 1% lower, with Spain’s Sabadell down over 3% after bigger rival BBVA said it raised its bid for the bank by 10% to 3.39 euros per share.
This took the pan-European STOXX 600 index down 0.2% with Spanish equities down over 1% and the German markets down 0.6%.
Meanwhile, MSCI’s broadest index of world stocks was little changed.
India’s benchmark index closed around 0.6% lower after the Trump administration’s announcements about new H-1B worker visas. India’s $283 billion information technology sector, which gets more than half its revenue from the U.S., will likely feel the pain in the near term.
Trump last month also doubled tariffs on imports from India to as much as 50%, partly due to New Delhi’s purchases of Russian oil.
In China, stocks were choppy even as Trump said he and Chinese President Xi Jinping had made progress on a TikTok agreement. The blue-chip CSI300 index closed roughly 0.5% higher.
FED POLICY OUTLOOK
On the macroeconomic front, investors remain keen to gauge the U.S. monetary policy path after the Fed indicated a gradual easing phase in the future, with traders pricing in 44 basis points of easing in the two policy meetings left for the year.
A host of policymakers is expected to speak in the week including John Williams, Thomas Barkin and Stephen Miran on Monday, and Raphael Bostic and Michelle Bowman on Tuesday along with Fed Chair Jerome Powell.
“Now it’s time for central bankers to come out and explain everything,” said James Rossiter, head of global macro strategy at TD Securities, who hoped that over the next two days these remarks will help markets shape expectations more precisely.
Data on the Fed’s preferred gauge of inflation is due on Friday and will also help set the tone for the near-term rate outlook.
The expectation is for the core PCE price index for August to rise by 0.2% on a monthly basis, which would keep the annual rate steady at 2.9%, and above the 2.6% low it reached in April, according to Tony Sycamore, market analyst at IG.
“Although even a shallower rate-cutting cycle should, in theory, weigh on the U.S. dollar, the U.S. dollar short trade has become crowded,” Sycamore said, adding the dollar index has lost downside momentum in recent months after a torrid start.
The dollar index, which measures the U.S. currency against six other units, ticked down 0.3% to 97.48.
The Japanese yen steadied at 147.87 per U.S. dollar after strengthening on Friday following the Bank of Japan’s hawkish hold where two board members voted against keeping interest rates steady.
Oil prices fell despite heightened geopolitical tensions in Europe and the Middle East, with Brent crude futures 47 cents lower at $66.20 a barrel. U.S. West Texas Intermediate futures fell 31 cents to $62.37. [O/R]
Gold prices climbed, and were last up roughly 1.2% and at hitting fresh record highs of over $3,726 per ounce. [GOL/]
(Reporting by Nell Mackenzie and Ankur Banerjee; Editing by Shri Navaratnam; Editing by Jacqueline Wong,d Bernadette Baum and Chizu Nomiyama )
