Monday September 25th

25-09-2017

US futures point to lower open as investors eye health-care reform, German election result

U.S. stock index futures pointed to a lower open on Monday as investors digested elections in Germany and eyed new regulations on health care in the U.S. Angela Merkel's conservative bloc will be the largest party in the next German parliament, but provisional election results point to a worse-than-expected majority for the German chancellor. Merkel's center-right Christian Democratic Union (CDU) and its Bavarian sister-party the Christian Social Union (CSU) won 33 percent of the vote. It would make them the largest parliamentary group, but that is down from 41.5 percent in the last election in 2013 and lower than recent polling. It is also their worst result since 1949, according to Reuters. The euro weakened to trade near $1.187. The German 10-year bund yield fell to 0.41 percent. European stocks were marginally higher on Monday morning as investors digested the results. The nationalist Alternative for Germany (AfD) won parliamentary seats for the first time. In Asia, Japanese Prime Minister Shinzo Abe announced snap elections for next month and also ordered his cabinet to compile new economic stimulus measures in a package worth around 2 trillion yen ($17.80 billion). The Nikkei 225 rose half a percent, while the Hang Seng fell more than 1 percent. The Shanghai Composite shed 0.35 percent to close at 3,340.8091 and the Shenzhen Composite sank 1.242 percent to end at 1,963.8951. U.S. stocks closed narrowly mixed Friday, with the Dow Jones industrial average and S&P 500 posting a second straight week of gains. New York Fed President Bill Dudley said Monday morning the Fed is on track to gradually raise interest rates, since factors depressing inflation are "fading". U.S. economic fundamentals are also sound, said Dudley, vice chairman of the Fed's rate-setting committee. Treasury yields edged off session lows, with the U.S. 2-year yield around 1.44 percent and the 10-year yield near 2.25 percent. On the data front, Dallas Fed manufacturing data is due at 10:30 a.m. ET and Red Hat is due to report fresh earnings after the market close. Gold eased on Monday as the prospect of a fractured parliament in Germany following Chancellor Angela Merkel's less than resounding election victory over the weekend knocked the euro lower. Consequent dollar strength helped push gold back towards Thursday's low of $1,287.61 an ounce, its weakest since Aug. 25, which fed into a second straight weekly decline for the metal. Spot gold was down 0.2 percent at $1,294.46 an ounce, while U.S. gold futures for December delivery were 40 cents an ounce lower at $1,297.10. Gold has now slipped nearly 5 percent from the more than one-year high it hit on Sept. 8, largely on the back of concerns over North Korea's nuclear ambitions, which have now waned.