Monday September 28 th


Wall Street sets for cautious open

U.S. stocks looked poised for a weak start to the week, with sentiment cautious ahead of U.S. Federal Reserve speakers, economic data and a budget battle in Washington. Asian markets closed mixed on Monday as data from China showed industrial profits declined 8.7 percent in August from a year earlier — their biggest drop since 2011 — providing further evidence of weakness in the world's second-largest economy. European markets traded lower on the day, while Dow Jones industrial average stock futures were about 100 points lower – reversing early gains and pointing to a lower open for the blue-chip U.S. stock index. Commodities weighed, with both crude and brent down about 2 percent and copper off nearly 2 percent. Shares of Glencore plunged more than 25 percent in London trade. August personal income data showed an increase of 0.3 percent in personal income and a 0.4 percent increase in consumer spending, roughly in-line with estimates. Treasury yields trimmed losses, with the 10-year yield at 2.15 percent and the 2-year yield near 0.70 percent. The U.S. dollar traded mildly higher, with the euro below $1.12 and the yen at 120.2 yen against the greenback. August pending home sales data is due at 10:00 a.m. and the September Dallas Fed Survey at 10:30. New York Fed President William Dudley said the central bank will likely raise rates this year, Dow Jones reported. He noted international events have created uncertainty about the U.S. outlook. Chicago Fed President Charles Evans is also scheduled to speak later in the day. Their comments are likely to be in focus following remarks by Fed Chair Janet Yellen last week that a rate increase later this year would be appropriate.  "By putting the prospect of a rate rise back on the table by the end of this year, her (Yellen's) comments appear to have reassured some nervous investors that despite not acting in September, the Fed remains cautiously upbeat by the strength of the U.S. economy, and that there appears to be a growing quorum within the FOMC (Federal Open Market Committee) for a move by the end of the year," Michael Hewson, chief market analyst at CMC Markets, said in a note. "We will discover later today how comprehensive that quorum is when both the Chicago Fed's Charles Evans, an avowed dove, and William Dudley of the New York Fed are due to speak on monetary policy," he added. Robust second-quarter U.S. economic growth data on Friday have bolstered the case for a rate increase before the end of the year, while this Friday sees the release of the closely-followed non-farm payrolls report. Attention was also expected to remain on Washington, where House Speaker John Boehner resigned on Friday as speaker and from Congress. Boehner was facing "turmoil" within the Republican Party over whether funding for Planned Parenthood should be tied to the federal budget. If the budget does not pass, the government would be shut down from Thursday. Asian equity markets were mixed on Monday, with data from the world's second largest economy in focus. But volumes in the region were light with Hong Kong, Taiwan and South Korea shut for the Mid-Autumn Festival. Nikkei slips 1.3%. Japanese shares fell as much as 1.5 percent, losing ground after a near 2 percent rally on Friday ahead of Wednesday's Japanese industrial profits data and Thursday's Bank of Japan corporate sentiment survey. Oil prices fell on Monday, paring some of last week's 2 percent rally, despite evidence of slowing U.S. production and a fourth weekly increase in U.S. investor holdings of crude futures. High oversupply and concern about demand growth in emerging markets and elsewhere have stripped 50 percent off the value of a barrel of oil over the last year and kept the price below $50 for most of the past nine weeks. Brent crude futures were down 83 cents, or 1.7 percent, at $47.77 a barrel at 8:46 a.m. EDT (1246 GMT), while U.S. West Texas Intermediate crude was down 93 cents, or 2 percent, at $44.77 a barrel. Gold fell for a second session on Monday, as the dollar stood close to a five-week high ahead of a key U.S. jobs report later in the week, which could boost bets the Federal Reserve will hike interest rates this year. Spot gold fell 1.4 percent to $1,131.03 an ounce, extending Friday's declines made after Fed chair Janet Yellen said she expected to begin raising rates later in 2015.