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03.11.2021 10:00

S&P 500 Futures: Indecisive near record top as investors await Fed

  • S&P 500 Futures struggle to extend Wall Street gains amid pre-Fed trading lull.
  • Off in Japan restricts bond moves and adds to the lackluster session.
  • US stimulus headlines, ADP Employment Change and PMIs can entertain traders.

S&P 500 Futures seesaws around the all-time high near 4,630 during early Wednesday. In doing so, the risk barometer portrays the typical pre-Fed trading lull by the press time. Adding to the market’s sluggish moves is the bank holiday in Japan.

Wall Street posted notable gains the previous day amid brighter earnings and hopes of the US stimulus. However, chatters surrounding a further delay in the $1.75 trillion infrastructure stimulus and Evergrande tested market sentiment afterward.

Read: S&P 500 posts fourth consecutive record close, Dow clinches 36K level

In contrast to the previous hopes of getting the deal done during this week, US Senator Joe Manchin said, per the CNN, to have chief concerns that will need to be addressed in order to secure his vote for the $1.75 trillion economic package. The policymaker was cited expressing new optimism that a deal could ultimately be reached that would win his support on President Joe Biden's domestic agenda before Thanksgiving.

Elsewhere, the Financial Times (FT) highlights the remaining coupon payment by China’s struggling real estate player Evergrande to pinpoint the market risk. “Evergrande faces rising repayment pressure on its dollar-denominated bonds in the coming months, despite making several last-minute transfers in October that allowed the heavily indebted Chinese property company to narrowly avoid a default,” said the FT. The news adds, “Investors and global markets will be watching for clues as to the eventual fate of the world’s most indebted property developer, which faces $8.1bn in interest and principal payments on its offshore bonds before the end of 2022 and has hundreds of projects across China.”

It’s worth noting that a rebound in the US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, also challenge the risk appetite before the key Fed verdict. That said, the inflation gauge snapped a four-day downtrend to bounce off the lowest levels since October 12 by the end of Tuesday’s North American trading.

Amid these plays, commodities remain pressured while the major currency pairs look for a fresh direction. Also to note is the bank holiday in Japan that restricts global bond moves and adds filters to the market’s performance.

Looking forward, investors will closely observe Fed decision expectations of $15.00 billion of tapering eyed.

Read: Fed Interest Rate Decision Preview: Inflation, employment and interest rates

Also important will be the updates on the US stimulus and early signals for Friday’s jobs report, namely US ADP Employment Change, as well as US ISM Services PMI.


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