US markets are expected to open lower on Monday, the first day of a holiday-shortened week that includes the start of the new earnings season and the release of vital inflation data.
Dow Futures
The Dow Futures contract was down 30 points, or 0.1 percent, at 7 a.m. ET (1100 GMT), while the S&P 500 Futures were down 15 points, or 0.3 percent, and the Nasdaq 100 Futures were down 110 points, or 0.8 percent. Last week, the major Wall Street indices all fell, with the tech-heavy Nasdaq Composite leading the way with a 3.9 percent drop, driven down by rising US Treasury yields.
On Monday, the benchmark 10-year US Treasury yield traded at 2.75 percent, slightly below its highest level since March 2019, as investors braced expecting the Federal Reserve to raise interest rates aggressively throughout the year to combat rising inflation.
February’s consumer price inflation figure of 7.9% was the highest in 40 years, and skyrocketing commodity costs as a result of the Ukraine war mean that March’s data on Tuesday is expected to indicate that CPI rose even more, by an annualized 8.5 percent.
High inflation rate is a concern for investors
A high rate of inflation would certainly increase investor concerns that tighter monetary policy will stifle the economy.
Michelle Bowman, Christopher Waller, Raphael Bostic, and Charles Evans are among the Fed policymakers slated to speak during a week cut short by Friday’s Easter vacation. Their remarks will be scrutinized for signals about the rate at which the Fed will tighten in the future.
Reports from large American Banks before the market opens on Wednesday
This week also marks the start of the first quarter earnings season, with the large American banks leading the way. On Wednesday, JPMorgan (NYSE:JPM) will report earnings before the market opens, while Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), and Wells Fargo (NYSE:WFC) will report on Thursday.
Despite declaring a 9.2 percent investment in the social media company last week, billionaire investor Elon Musk decided not to accept a seat on the board of Twitter (NYSE:TWTR) on Monday.
Oil prices dipped on Monday, extending recent losses as China’s lockdowns continue as the Covid epidemic intensifies, putting downward pressure on demand from the world’s top crude importer.
On Sunday, Shanghai reported over 26,000 new cases, a new high, indicating how tough it has been for the country to curb the spread of the extremely contagious omicron form despite lockdowns and widespread testing. In addition, European Union officials will meet with OPEC delegates in Vienna later Monday in the hopes of persuading the cartel to increase output as the EU weighs possible Russian oil penalties.
Gold Futures
By 7 a.m. ET, U.S. crude futures were down 3.4 percent to $94.91 per barrel, while the Brent contract was down 3% to $99.72 per barrel. Last week, both benchmarks fell more than 1%, marking the second straight week of losses.
Gold futures increased 0.5 percent to $1,955.70 per ounce, while the EUR/USD rose 0.3 percent to 1.0913.