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US futures rise at start of Q2, fresh record for gold- what's moving markets

Published 04/01/2024, 04:23 AM
© Reuters

Investing.com – U.S. futures pointed to a higher open on Wall Street as the second quarter kicks off. Gold prices surge to a fresh record on bets for rate cuts from the Federal Reserve. Trade volumes look set to remain light in holiday thinned trade and oil prices rise. Here’s what you need to know to start your day.

1. Futures higher as Q2 gets underway

U.S. stock futures traded higher on Monday following a market holiday on Friday, when data showed that prices increased less than expected in February, keeping a June interest rate cut from the Federal Reserve on the table.

By 04:20 ET (08:20 GMT), the Dow futures contract was 110 points, or 0.3%, higher, S&P 500 futures gained 19 points, or 0.3%, and Nasdaq 100 futures rose by 88 points, or 0.5%.

Sentiment was boosted as Wall Street prepared for the second quarter to get underway after Chinese PMI data showed that manufacturing activity expanding for the first time in six months.

Trading volumes will remain light with many markets closed for Easter holidays, including Australia and Hong Kong in Asia, and the United Kingdom and Germany.

Investors will be looking ahead to ISM manufacturing PMI data for March later in the day amid hopes for a soft landing for the U.S. economy.

2. Q2 kicks off

The U.S. stock market has had a strong start to the year, boosted by optimism over artificial intelligence related stocks and expectations the Fed will begin to cut interest rates this year.

Each of the three main U.S. indexes recorded solid quarterly gains, led by a climb of over 10% for the S&P 500 for its biggest first-quarter gain since 2019.

Whether that rally continues into the second quarter is largely down to the Fed. At the start of the year markets had been expecting six rate cuts from the Fed – now just three are priced in and officials have not yet signalled that inflation has come down enough to justify a rate cut.

Continued strong momentum will also depend on corporate earnings which get underway in earnest the second week in April.

3. Gold hits fresh record highs on rate cut bets

Gold prices rose to a record high on Monday, as a softer U.S. inflation reading cemented bets that the Fed would deliver its first interest rate cut of the year in June.

Spot gold was up 1.1% at $2,258.88 per ounce, as of 04:20 ET (08:20 GMT), after hitting an all-time high of $2,265.73 earlier in the session. U.S. gold futures gained 1.8% to trade at $2,279.40.

Traders are currently pricing in a 60% probability that the Fed would begin cutting rates in June, according to Investing.com’s Fed Rate Monitor Tool.

Lower interest rates reduce the opportunity cost of holding bullion.

Gold logged its biggest monthly rise in more than three years in March after a blistering rally fuelled by rate-cut bets, strong safe-haven demand and central bank buying.

4. Microsoft to separate Teams and Office globally – Rtrs

Microsoft (NASDAQ:MSFT) will sell its chat and video app Teams separately from its Office product globally, Reuters reported Monday, six months after it unbundled the two products in Europe in a bid to avert a possible EU antitrust fine.

The European Commission has been investigating Microsoft's tying of Office and Teams since a 2020 complaint by Salesforce-owned competing workspace messaging app Slack.

"To ensure clarity for our customers, we are extending the steps we took last year to unbundle Teams from M365 and O365 in the European Economic Area and Switzerland to customers globally," a Microsoft spokesperson said.

"Doing so also addresses feedback from the European Commission by providing multinational companies more flexibility when they want to standardise their purchasing across geographies."

5. Oil prices rise

Oil prices ticked higher on Monday, building on recent gains as upbeat factory data out of China supported the demand outlook while concerns over tight supples also underpinned prices.

By 04:20 ET (08:20 GMT), U.S. crude futures traded 0.5% higher at $83.58 a barrel following a 3.2% gain last week, while the Brent contract was up 0.3% to $87.33 per barrel after rising 2.4% last week.

China's manufacturing activity expanded for the first time in six months in March, an official factory survey showed on Sunday, supporting oil demand at the world's largest crude importer, even as a crisis in the property sector remains a drag on the economy.

Both benchmarks finished higher for a third consecutive month in March, with Brent holding above $85 a barrel since the middle of last month, as the Organization of the Petroleum Exporting Countries (OPEC) and their allies, a group known as OPEC+, pledged to extend production cuts to the end of June which could tighten crude supply during summer in the Northern Hemisphere.

(Reuters contributed reporting)

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