Tuesday December 6th

U.S. stock index futures were little changed Tuesday, as traders took a breather after fears of even higher rates sparked a sell-off during the previous session. Futures tied to the Dow Jones Industrial Average traded 20 points higher, or 0.06%. S&P 500 and Nasdaq-100 futures rose marginally higher. The Nasdaq Composite led Monday’s downward charge, dropping 1.93% for its biggest one-day drop since Nov. 9. The S&P 500 shed 1.79%, also notching its worst day in nearly a month. The Dow, meanwhile, lost 482 points, or 1.4%. Better-than-expected November ISM Services data, which looks at the purchasing level of manufacturers as a gauge the health of the broader economy, pressured equities Monday. The report stoked fears that the Federal Reserve will need to hike rates for longer than anticipated to bring down inflation. The release aligns with the payrolls report late last week in pointing to resilience within some areas of the economy. Wall Street is largely expecting a 50 basis point increase to interest rates at the Fed’s December meeting, but remain conflicted over how long the central bank’s interest rate hiking campaign will need to last, especially given the latest data. Despite this backdrop, markets could still move higher in the months ahead, even though slowing growth and higher rates will persist even into the new year, wrote Jason Draho, UBS’ head of asset allocation, in a note to clients. “A year-end rally may still be in the offing, though investors are likely to remain skittish until November CPI is released on the 13th and the FOMC meeting concludes on the 14th,” he said. “If there are no surprises with these events, momentum could continue.” Investors will look ahead to data Tuesday morning on international trade for insight into the strength of the U.S. and global economy. Later in the day, they will watch for post-bell earnings reports from Smith & Wesson and Stitch Fix. Shares in the Asia-Pacific were mixed on Tuesday after Wall Street sold off overnight on fears that the Fed will keep increasing interest rates. Hong Kong’s Hang Seng index was 0.75% lower in the final hour of trade, with the Hang Seng Tech index declining 2.04% – despite Beijing easing some Covid test requirements for the city. Markets rallied on reopening hopes on Monday. Meanwhile, the Shanghai Composite in mainland China closed fractionally higher at 3,212.53, and the Shenzhen Component was up 0.667% at 11,398.82. In Australia, the S&P/ASX 200 fell 0.47% to 7,291.30 and the Australian dollar was at around $0.6720 after the Reserve Bank of Australia raised rates by 25 basis points. The Nikkei 225 in Japan gained 0.24% to 27,885.87, and the Topix rose 0.12% to 1,950.22, while South Korea’s Kospi dropped 1.08% to 2,393.16. Oil prices fell in a volatile market on Tuesday, as a stronger U.S. dollar and economic uncertainty offset the bullish impact of a price cap placed on Russian oil and prospects of a demand boost in China. Brent crude futures fell 90 cents, or $1.09%, to $81.78 a barrel by 1055 GMT. West Texas Intermediate crude (WTI) fell 79 cents, or $1.03%, to $76.14. Earlier in the session, both contracts fell by more than $1 while Brent rose by over $1 in Asian trading. Gold prices climbed on Tuesday after shedding more than 1% in the last session as the U.S. dollar eased, although traders awaited more cues on the outlook for interest rates by the U.S. central bank. Spot gold rose 0.4% to $1,776.15 per ounce by 1133 GMT. U.S. gold futures gained 0.4% to $1,788.60.