U.S. stock futures suggest a mixed opening for Wall Street as investors analyze recent services sector data and the Federal Reserve’s outlook. Meanwhile, China’s exports show a decline in August, and a report suggests China is prohibiting government officials from using iPhones at work, affecting Apple’s shares.
Mixed Futures After Wednesday’s Slide
U.S. stock futures are showing a mixed outlook on Thursday following stronger-than-expected U.S. services sector data that sent Treasury yields higher and weighed on equities the previous day.
– At 05:40 ET (09:40 GMT), Dow futures are up 41 points or 0.1%.
– S&P 500 futures are down 9 points or 0.2%.
– Nasdaq 100 futures have fallen by 87 points or 0.6%.
Strong data from the Institute for Supply Management (ISM) showed that activity in the U.S. services sector unexpectedly accelerated in August, reaching a six-month high. This suggests that consumer demand may be resilient despite recent interest rate spikes.
Fed Survey Indicates Modest Economic Growth
The robust services data has led some to speculate that the Federal Reserve might raise interest rates later this year to counter the last remnants of last year’s surge in price increases. The probability of a rate hike at the Fed’s November meeting has increased to 43.6%, up from 39.3%.
However, most investors still believe that the Fed will maintain borrowing costs within the 5.25% to 5.50% range for the remainder of 2023. The Fed’s “Beige Book” summary also suggested modest growth and cooling inflation in the U.S. economy in July and August, supporting this view.
Crude Oil Prices Slip on Weak Chinese Trade Data
Oil prices have retreated from 10-month highs as concerns over slowing Chinese growth overshadow another drop in U.S. inventories, indicating tighter supplies.
Chinese trade figures, while surpassing expectations, point to potential struggles in reaching Beijing’s annual growth target of about 5%. This adds pressure to China’s vital manufacturing sector, which is already grappling with issues like a property sector liquidity crisis.
China’s Exports Slump
China’s exports have contracted by 8.8% annually in August, with imports shrinking by 7.3%. This reflects significant challenges in China’s essential manufacturing sector.
The country’s economy faces not only declining exports but also a property sector liquidity crisis. While Beijing has introduced smaller measures to support growth, it has not yet initiated a comprehensive stimulus program.
China Restricts Government Officials from Using iPhones at Work
Apple shares have dipped by nearly 3.6% following reports that China has banned government officials from using iPhones and other foreign-branded devices for work.
The Wall Street Journal revealed that this order, implemented in recent weeks, also forbids government workers from bringing foreign-branded smartphones into the office. It remains unclear how broadly these directives are being disseminated.
Investors perceive this development as a potential indication of China’s willingness to reduce its reliance on American companies to boost domestic players, which could impact Apple’s business in China significantly.
These factors are set to influence market sentiment as investors continue to assess the economic landscape and its implications for various sectors and companies.