Statements by Fed officials, US government investigations into German companies and inflation previews are among the topics
Wall Street futures were mixed on Wednesday (September 25, 2024), after a new peak for the S&P 500 in the previous session. Investors will have a chance to analyze the comments from the Fed (Federal Reserve) Adriana Kugler, who will join a chorus of policymakers making statements this week about the Fed’s big interest rate cut last week.
The U.S. government is investigating German company SAP and reseller Carahsoft for allegedly overcharging government agencies. In Brazil, the September inflation preview is in focus.
1. Kugler’s speech
Fed Governor Adriana Kugler is due to speak on Wednesday (September 25), with markets eager to see if she will become the latest policymaker to comment on last week’s interest rate cut.
Kugler will deliver a speech at the Harvard Kennedy School at 5 p.m. ET, the Fed said. More Fed officials are scheduled to make public statements this week, including Chairman Jerome Powell.
On Tuesday (September 24), Fed Governor Michelle Bowman defended her decision to vote against the oversized 50 basis point cut – a measure that corresponds to 0.01 percentage point – in the interest rate and support a more traditional reduction of 1/4 of a percentage point, highlighting that the main inflation readings remain “uncomfortably above” the level of the target declared by the Fed.
His stance contrasts with that of several other Fed officials earlier this week, who argued that the half-point cut was necessary because high rates were putting too much pressure on the economy at a time when inflation appears to be fading and strains on labor demand are rising.
U.S. stock futures were mixed after the benchmark S&P 500 index closed at a second straight record high in the previous session.
At 7:55 am (Brasília time), the S&P 500 futures contract had fallen 0.02%, the Dow futures rose 0.10%, and the Nasdaq 100 futures lost 0.24%.
Wall Street’s major averages closed in the green, tracking gains in other international markets after China announced new stimulus measures aimed at reviving activity in the world’s second-largest economy. U.S.-listed Chinese stocks jumped, while lithium and copper miners advanced as metals prices rose.
However, a report from the Conference Board weighed on sentiment, showing that U.S. consumer confidence unexpectedly fell in September on concerns over the health of the labor market.
2. SAP and Carahsoft
The US government is investigating the German software company SAP and the product reseller Carahsoft on the possibility of overcharging government agencies for at least a decade, the Bloomberg News this Wednesday (25th September).
The Justice Department is investigating whether enterprise software maker SAP illegally conspired with Carahsoft to fix higher prices on sales to the U.S. military and other government agencies, the Department of Justice said. Bloomberg, citing federal court records filed in Baltimore. The investigation has been ongoing since at least 2022.
Carahsoft had its offices in Virginia raided on Tuesday (September 24) by FBI agents and military investigators.
3. Gold market
Gold prices fell slightly after hitting a new record high on Wednesday (September 25).
At 07:57 a.m. ET, spot gold was 0.07% lower at $2,655.16 an ounce. It had earlier hit a record high of $2,670.43 an ounce in Asian trade.
The prospect of lower interest rates was a key support for gold as investors priced in a lower opportunity cost to invest in non-yielding assets. Gold also saw some safe-haven demand sparked by rising tensions in the Middle East.
This week’s comments from Fed speakers, as well as the release of the Fed’s preferred inflation gauge on Friday (Sept. 27), could offer more insight into where borrowing costs are headed.
4. Oil market
Oil prices fell on Wednesday (September 24), with investors reassessing the likely impact of new monetary stimulus from top importer China.
At 07:58, the Brent contract was down 0.56% at $74.05 per barrel, while U.S. crude futures (WTI) were trading 0.71% lower at $71.05 per barrel.
Both benchmark indexes rose just under 2% on Tuesday (Sept. 24) after China unveiled its latest flurry of stimulus measures. However, investors noted that more aid may be needed to boost the economic outlook of the world’s largest crude oil importer, according to the Reuters.
Dwindling U.S. crude oil inventories provided some support to the market as data from the American Petroleum Institute U.S. crude inventories fell 4.34 million barrels last week, according to data from the Energy Information Administration. Official figures from the U.S. Energy Information Administration are due later in the session.
5. IPCA-15 in Brazil
Following the release of the minutes of the last meeting of the Central Bank’s Monetary Policy Committee (Copom) yesterday, investors are awaiting the release of the IPCA-15 (Broad National Consumer Price Index 15), a preview of the country’s official inflation. The consensus expectation indicates a monthly increase of 0.29%, compared to a rise of 0.19% in the previous month.
Acceleration must be performed by “lower deflation in the food at home group, mainly in natural foods (especially fruits), cereals and meats, airfare, which should go from a deflation of almost 5% to a variation close to +10%, and electricity, reflecting the activation of the red flag 1 in September”detailed the Warren Investments, which expects an increase equal to the consensus.
However, the Warren sees a smaller increase in gasoline in this reading, as does the education group as a whole, given the seasonality of adjustments.
At 7:59 a.m. ET, the EWZ ETF (NYSE:EWZ) was flat in premarket trading.
With information from Investing Brazil.
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