U.S. stock futures saw modest gains as Wall Street anticipated a crucial week of third-quarter earnings from major banks and key inflation data. Despite lingering geopolitical concerns in the Middle East and fluctuating oil prices, tech stocks continued their rally, propelling major indexes to a winning streak. Meanwhile, Volkswagen faced declining deliveries driven by a sharp drop in Chinese demand, and European markets opened higher.
U.S. stock futures showed modest gains early Monday, setting the stage for a pivotal week on Wall Street. Investors are keenly awaiting the kick-off of third-quarter earnings season by major banks and the release of crucial inflation data, all while navigating an evolving geopolitical landscape.
Futures tied to the S&P 500 advanced 0.33%, Nasdaq 100 futures rose 0.45%, and Dow Jones Industrial Average futures climbed 0.35%, indicating a positive start after major averages posted a strong winning week. A robust rally in technology stocks last week helped investors largely overlook rising oil prices and bond yields. The Dow and S&P 500 each recorded their second positive week in three, while the Nasdaq Composite notched its fourth consecutive week of gains.
Internationally, Asian markets presented a mixed picture. South Korea's Kospi fell 3.03%, while Australia's S&P/ASX 200 added 0.74%. Hong Kong's Hang Seng index gained 0.17%, and mainland China's CSI 300 slipped 0.15%. Japanese markets were closed for a holiday.
Geopolitical tensions remain a significant factor. President Donald Trump indicated over the weekend that he was considering joining Saudi Arabia in its conflict against Tehran-backed Houthis in Yemen, following another deadly attack on Riyadh's international airport. This raised the specter of escalating regional tensions. However, oil prices saw a decline in Monday's Asian trading session after Trump announced an 'energy ceasefire' between Russia and Ukraine, suggesting a potential easing of supply concerns. Brent crude futures dipped to $102.99 a barrel, and U.S. West Texas Intermediate futures fell to $90.09 per barrel.
The upcoming third-quarter earnings season is anticipated to be strong, with FactSet's John Butters forecasting a 29.6% earnings growth for the S&P 500, marking the fourth consecutive quarter of over 25% growth, largely fueled by the AI data center buildout. However, investors will be scrutinizing management commentary for insights into how businesses are contending with persistent high fuel and borrowing costs, particularly with Brent crude trading above $104 a barrel and the 10-year yield hitting levels not seen since 2002.
The reporting season will ramp up with results from major U.S. banks, including Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo, all expected this week. Additionally, key inflation data will be released, with the September consumer and producer price indexes due out Wednesday and Thursday, respectively.
Beyond the broader market, several specific corporate and regional developments made headlines:
- Volkswagen's Deliveries Slide: The German automaker reported a 9% year-on-year decline in vehicle deliveries for the first nine months of the year, with a steeper 14.3% drop in the third quarter. This slump was primarily driven by a 38.5% plunge in demand from China. Despite this, Volkswagen noted a significantly accelerated trend towards all-electric vehicles in its home market, with EVs now accounting for approximately 40% of its European order book. Shares rose 1.4% in early trading.
- European Equities Open Higher: European stock markets began the week positively, with the pan-European Stoxx 600 gaining 0.45%. Banks and carmakers led the advance, while oil and gas companies, alongside tech stocks, experienced slight losses. Italy's FTSE MIB led the continent's major bourses.
- South Korean Won Reaches Two-Year High: The South Korean won strengthened to 1,332.88 per dollar, a two-year high, buoyed by heavy selling of the greenback by local companies and lower oil prices. The currency has appreciated 7.4% against the U.S. dollar year-to-date.
- Thailand's Budget Deficit Pledge: Finance Minister Ekniti Nitithanprapas stated Thailand aims to reduce its budget deficit to below 3% of GDP within a few years, shifting reliance to private investment for growth as public debt approaches its 70% ceiling.
- Foxconn Shares Fall Amid U.S. Patent Probe: Shares of Foxconn (Hon Hai Precision Industry) fell 1.81% in Taiwan after the U.S. International Trade Commission initiated a patent infringement investigation against several companies, including Foxconn, concerning vertical power delivery systems. This comes despite Foxconn reporting a 47% jump in Q3 revenue due to strong AI-related demand.
As the week progresses, the interplay of corporate earnings, economic data, and global events will likely shape market sentiment.
