© Reuters
Investing.com – U.S. stock futures are in the green heading into the final full week of trading before the Christmas holiday, as investors eye the prospects for possible interest rate cuts by the Federal Reserve next year. Elsewhere, gene sequencing company Illumina (NASDAQ:) announces plans to sell blood cancer test seller Grail after intense antitrust scrutiny and shares in China SenseTime Slip after announcing the death of its founder.
1. Futures rise
U.S. stock futures rose slightly on Monday, suggesting a possible extension of the Christmas rally that was fueled by hopes of a U.S. Federal Reserve policy turnaround next year.
As of 5:01 a.m. ET (10:01 GMT), the contract had gained 73 points, or 0.2%, was up 12 points, or 0.2%, and was up 23 points, or 0.1%.
Wall Street's major indexes were mixed at the end of last week after New York Fed President John Williams noted that policymakers aren't “really talking about” interest rate cuts at the moment. The comments dampened hopes that the central bank would begin cutting interest rates as early as spring from their peak in more than two decades.
Last week, the Fed voted to keep borrowing costs stable at 5.25% to 5.50%. However, new quarterly forecasts showed members pricing in cuts of 75 basis points in 2024, buoyed by signs of cooling inflation and robust economic growth. The announcement helped lift the benchmark, 30-stock and tech-heavy, to its seventh straight week of gains. Yields on US government bonds, which move in the opposite direction to prices, also fell.
2. Gold glitters
The Fed's dovish outlook has also led to a rise in gold prices, putting the yellow metal on track for its first annual rise since 2020.
According to Investing.com, investors now see about a 65% chance that the bank will announce a quarter-point rate cut as early as March next year, up from nearly 42% the previous week. The probability of the Fed making another rate cut in May is about 58%, well above last week's level of about 24%.
These expectations have reduced the attractiveness of owning gold bullion without yield. A decline in the U.S. dollar has also burnished gold, making it cheaper for foreign buyers. The U.S. dollar, which tracks the greenback against a basket of other currencies, lost 1.3% last week.
As of 5:01 a.m. ET on Monday, prices were up 0.2% at $2,023.13 a troy ounce.
3. Illumina sells Grail
Illumina has announced it will divest cancer screening start-up Grail as the gene sequencing device maker seeks to appease antitrust regulators in both the US and Europe.
In a statement Sunday, San Diego-based Illumina noted that the sale would occur through a “third-party sale or capital markets transaction.”
Illumina acquired Grail in 2021 in a deal that valued the seller of a blood test for early detection of cancer at $7.1 billion. However, the agreement has come under intense scrutiny, particularly after it was concluded without the formal approval of the European Commission. The divestment of Grail was “in line” with an order from Brussels, Illumina noted.
The troubled deal was also rejected by the U.S. Federal Trade Commission, which pointed out that Illumina could deny key contributions to cancer-detection blood tests offered by Grail's competitors.
On Friday, a federal appeals court found that while the FTC was right to challenge the lawsuit, it must re-examine the purchase. Illumina said it would not appeal the ruling.
Shares of Illumina rose slightly in premarket trading in New York on Monday.
4. SenseTime shares fall after AI company announces death of its co-founder
Shares of SenseTime Group (HK:) plunged on Monday, hitting an all-time low after the Chinese artificial intelligence company announced the death of founder Tang Xiao'ou.
SenseTime (HK:) said over the weekend that Tang died on Friday from an unspecified illness. He is 55 years old, CNBC reported.
Tang, a professor at the Chinese University of Hong Kong, founded SenseTime in 2014. Its AI-based content generation and facial recognition technology have since seen strong demand in both the public and private sectors.
However, the company has also been on the US authorities' blacklist since 2019. Washington claims SenseTime assisted Beijing in state surveillance of Uyghur minorities in China's Xinjiang region.
5. Oil restless
Oil prices were volatile on Monday as traders weighed Russian export cuts and jitters over attacks on merchant ships in the Red Sea with weak business morale data from Europe's top economy Germany and a new forecast from Goldman Sachs.
At 6:23 a.m. ET, futures were trading 0.5% higher at $72.17 a barrel, while the Brent contract rose 0.6% to $76.99 a barrel. Both benchmarks posted limited gains last week and pared seven straight weeks of declines, thanks in large part to hopes of Fed rate cuts next year.
Crude oil prices received support from Russia, which announced on Sunday it would tighten oil export cuts by about 50,000 barrels per day in December. Additionally, concerns are growing about possible disruption to global supplies as a number of shipping companies said they would avoid the Suez Canal amid increasing attacks by Houthi militants in Yemen on merchant vessels in the Red Sea.
However, according to the Ifo Institute, sentiment among German companies unexpectedly deteriorated in December, with energy-intensive industries “having particularly difficult times”. The survey says companies are “more skeptical about the first half of 2024.”
Sentiment was also influenced by Goldman Sachs' decision to cut its 2024 price expectations by $10 a barrel to between $70 and $90. The bank said strong U.S. production could ease potential upward pressure on oil prices.
Comments are closed.