Dow Futures fall after a worldwide bond market selloff as robust U.S. business activity statistics and rising oil prices spur expectations on more central bank policy tightening later this year. President Donald Trump and Chinese President Xi Jinping are scheduled to discuss trade and AI during a crunch summit.
Dow futures fell Thursday as investors analysed a global bond rate increase and prepared for the Trump-Xi summit. At 02:55, Dow futures had slid 155 points, or 0.3%, S&P 500 futures 37 points, or 0.5%, and Nasdaq 100 futures 211 points, or 0.7%. The key averages on Wall Street fell in the previous session due to a bond market selloff caused by strong September U.S. business activity. The UN General Assembly meeting this week may lead to a compromise to halt the Iran war, as oil prices rose beyond $100 a barrel.
The much-anticipated Trump-Xi summit will likely be the main event today, with trade concerns looming. U.S. Treasury Secretary Scott Bessent announced Wednesday that the world’s two largest economies have extended a tariff ceasefire by two months. The accord, agreed last year and expiring in November, ended a tit-for-tat trade battle that threatened global economy. Bessent said the extension will give both sides more time to negotiate a wider trade truce. As Washington and Beijing prepared for the Trump-Xi meeting, Bessent met with Chinese Vise Premier He Lifeng for the second time in four days. Bessent noted that a new trade deal may not be reached by the January 10 deadline. Trade and artificial intelligence will be big issues, especially as both sides fight to build the strong technology first. Bessent claimed his Chinese counterparts had promised to build an AI safety notice system, but Beijing’s response was uncertain. Chinese state media said negotiators solely discussed AI.
Recent volatility in global bonds has shaken stock markets in recent weeks, looming over the talks. The latest selloff was partly caused by strong preliminary U.S. business activity data from S&P Global on Wednesday. The composite survey reading reached a five-year high, while manufacturing and service sector trackers exceeded expectations. The numbers showed resiliency in an American economy facing energy-driven inflation. Deutsche Bank analysts added that “this was part of a global theme,” citing Eurozone composite PMI readings that reached a three-year high. “So if anything, the initial signal from the PMIs suggested that growth was accelerating in September across many of the world’s biggest economies,” the analysts argued.
Brent crude oil rose almost 3%, ending a five-session losing streak and finishing above $100 a barrel. Despite optimism about a Middle East peace deal this week, an Iranian Foreign Ministry spokesperson laid out a strict list of conditions for restarting mediated talks, including Washington accepting a shipping route through the Strait of Hormuz pre-approved by Iran and Oman, lifting a U.S. naval blockade, and releasing frozen Iranian assets. President Masoud Pezeshkian added that Tehran would not allow unrestricted navigation through Hormuz while the U.S. boycott and sanctions remain. Hormuz shipping problems crushed Gulf oil flow hopes. Brent slipped below $100 earlier in the week largely due to reports that Saudi Arabia, a major oil producer, was restarting a damaged east-west pipeline across the nation. Deutsche Bank analysts said “Collectively, that strong data and the oil rebound led to growing speculation about faster rate hikes,” putting pressure on markets. After raising rates by a quarter percentage point last week, bets that the Federal Reserve will hike rates again before year’s end have surged.
Costco will report its fourth-quarter results on a lacklustre earnings schedule. In May, the company exceeded third-quarter sales expectations due to demand for cheaper petrol during rising energy prices. Prior Costco statistics show that while American consumers are apprehensive of making significant purchases owing to inflation, they are eager to seek out Costco’s affordable solutions. The company also lowered food costs, especially meat, which hurt third-quarter profitability. Costco shares have climbed almost 5% this year.
