Dovish Fed Talk Lifts S&P 500 Futures

S&P 500 futures rose after New York Fed President John Williams downplayed the need for hikes in 2027, as traders raised odds of an October hold. Singapore’s central bank surprised all analysts polled by keeping policy on hold. Citigroup reported mixed results overnight, while FTSE futures edged slightly higher. Oil climbed after more Houthi attacks on Saudi Arabia, and UK finance minister John Healey will reportedly fund budget measures without extra borrowing.

Equities

The FTSE 100 closed 0.06% lower at 10,650.33 on Tuesday, giving up early gains, while the FTSE 250 edged up 0.05%.

Antofagasta was the FTSE 100’s biggest faller on Tuesday, closing 5.6% lower as industrial metal miners dropped 1.7%. Precious metal miners slipped 1.4% on softer gold and silver prices.

London Stock Exchange Group fell 4.7% on Tuesday after confirming talks with Permira over buying financial data provider Octus for about $3.5bn.

BP rose 3.7% on Tuesday to its highest level since March after estimating that its third-quarter refining margins had tripled from a year earlier. Entain gained 4.7% after BetMGM, its US joint venture with MGM Resorts, reported a 7% rise in third-quarter revenue.

WPP climbed 4.2% on Tuesday after rival Publicis reaffirmed its full-year outlook. Melrose Industries added 3.5% after the GKN Aerospace owner said its Garden Grove plant was on track to restart by the fourth quarter.

The International Monetary Fund said Britain must keep deficit reduction on track, and the Financial Times reported that Chancellor John Healey will not raise capital gains tax to match income tax in his Budget on 28 October.

In New York, the S&P 500 slipped 0.02% to 7,805.45 on Tuesday, the Nasdaq fell 0.15% to 27,204.38 and the Dow Jones Industrial Average lost 0.35% to 51,670.10. Apple hit a record intraday high of $348.15 on Tuesday before closing 0.1% higher at $341.27.

Citigroup fell 5.6% on Tuesday and Goldman Sachs slipped 0.2% despite both beating profit forecasts, while Wells Fargo dropped 3.1% after net interest income missed estimates. JPMorgan Chase closed 0.9% lower after a rare profit miss.

Chipmakers extended their losses on Tuesday, with the PHLX chip index down 0.23% for a fifth straight session after Broadcom chief executive Hock Tan on Monday compared some investment in the sector to casino gambling. Applied Materials fell almost 7% and Micron lost 3.6%, while Broadcom rose 0.7%.

Bumble jumped almost 57% on Tuesday after the dating app operator agreed to go private in a $1.3bn deal. Johnson & Johnson fell 5.7% despite beating profit forecasts, and Domino’s Pizza lost 4.8% after cutting its full-year sales outlook.

Forex & Commodities

The US dollar was down early this morning at 102.1 against a basket of currencies, after sliding on Tuesday following comments seen as dovish from New York Fed President John Williams and Fed Governor Christopher Waller. Against the yen, the dollar was down at 158.2 yen. The euro was up at $1.121, while the British pound rose to $1.327, and the Australian dollar was up at $0.7001 and the New Zealand dollar higher at $0.5625.

US consumer price index data for September is due later today, with prices expected to rise 0.6% on the month after a 0.4% increase in August, lifting annual inflation to 3.6% from 3.4%. The Fed also publishes its Beige Book today, while Fed officials Thomas Barkin and Michelle Bowman are due to speak. Markets see a 77% chance that the Fed will leave rates unchanged at its October 27 to 28 meeting, up from 51% a month ago.

European Central Bank President Christine Lagarde said France should solve its debt problems through fiscal consolidation, damping speculation that the ECB might buy French bonds. In the UK, Chancellor John Healey is expected to fund all new measures in this month’s budget, including a cost-of-living package, through higher taxes or spending cuts rather than extra borrowing. German wholesale prices rose 8.7% in September from a year earlier.

Spot gold held steady early this morning at $4,165 an ounce ahead of the inflation figures. Traders were pricing a 22% chance of a Fed rate hike this month and an 88% probability of a December increase. Silver dipped to $59.33, platinum steadied at $1,663 and palladium rose to $1,133.

Oil prices rose early this morning after two vessels were struck in the Strait of Hormuz on Tuesday and Iranian officials said they were deploying new tactics to target ships. Brent crude was up at $106.3 a barrel, while WTI rose to $94.80, with both contracts paring earlier gains of more than $1.

Iran-allied Houthi forces attacked an administrative building belonging to Saudi Aramco in Dhahran, causing a limited fire. Saudi Arabia led a sharp rise in OPEC+ oil production in September despite disruption from the US-Iran war.

Economic Calendar

•      US CPI for September, expected to rise 0.6% month-on-month and 3.6% year-on-year

•      Fed Beige Book report

•      BlackRock, Morgan Stanley and Bank of America Q3 earnings

•      Richmond Fed President Thomas Barkin and Fed Vice Chair for Supervision Michelle Bowman speak

•      Germany reopening of 21-year and 30-year debt auctions, and UK reopening of 4-year debt auction