TSX gains after CPI shows US inflation rose 3%
Investing.com - U.S. equity futures edge lower, with attention fixed on Congressional lawmakers locked in a tense policy battle just hours before a looming federal government shutdown. A meeting between Republican and Democrat leaders and President Donald Trump fails to find a breakthrough, heightening both an uncertain outlook that has partially fueled a rise in gold to new record highs as well as worries over a potential delay to key economic data. Elsewhere, Trump announces a fresh slew of tariffs, and athletic apparel group Nike is due to report its latest results.
1. Futures dip
U.S. stock futures were pointing into the red on Tuesday, as investors assessed the potential ramifications of a federal government shutdown.
By 03:33 ET (07:33 GMT), the Dow futures contract had slipped by 79 points, or 0.2%, S&P 500 futures had dropped by 10 points, or 0.1%, and Nasdaq 100 futures had declined by 37 points, or 0.1%.
The main averages on Wall Street advanced on Monday, buoyed partially by a modest gain in U.S. Treasuries. Yields, which tend to move inversely to prices, fell by 1 - 3 basis points across the curve.
Bets that the Federal Reserve will continue to slash interest rates this year, coupled with soaring enthusiasm around artificial intelligence, offered support to stocks -and helped to alleviate some fears around the policy standoff in Washington.
In individual stocks, chip gear maker Lam Research jumped on a rating upgrade by Deutsche Bank, and AppLovin spiked to an all-time peak after Morgan Stanley raised its outlook for the firm.
2. U.S. government shutdown looms
The clock is ticking towards an impending deadline for U.S. lawmakers to pass a short-term funding bill, with the government set to close should a deal not be reached.
A Republican-backed spending bill was recently able to clear the House of Representatives, but is now facing resistance in the Senate. Republicans hold a 53-seat majority in the Senate, but require at least 60 votes to approve the spending bill.
Republican and Democratic leaders blamed each other for an impasse in negotiations following a meeting with President Donald Trump on Monday. Republicans accused their opposition of holding the government “hostage,” while Democrats, who have been demanding an extension to health care subsidies in exchange for their support in passing a funding bill, warned that not doing so could imperil health coverage for millions of Americans.
After the gathering, Vice President JD Vance said he now thinks the government is “headed to a shutdown.”
Crucially, analysts have warned that the shuttering of the government could delay the release of all-important nonfarm payrolls data, which is scheduled to be unveiled on Friday.
Yet markets will still have the chance to parse through fresh labor market figures later today, when a measure of job openings — a proxy for hiring demand — will be published.
3. Gold notches fresh record high
Gold prices hit fresh record highs, extending their strong run over the past week as traders fretted over a seemingly imminent U.S. government shutdown.
Such events could threaten to disrupt economic activity in the country, presenting possible risks to growth.
Persistent bets on more interest rate cuts by the Fed also benefited metal markets, although silver and platinum pulled back slightly from a stellar rally in the prior session. Copper prices also retreated.
Spot gold rose by 0.5% to $3,851.46 an ounce by 03:37 ET, while gold futures moved up by 0.7% to $3,880.70. The yellow metal was sitting on a roughly 17% gain in the third quarter.
4. Trump announces new tariffs
Meanwhile, a new wave of trade-related headlines added to the uncertain environment facing investors.
Trump has set tariffs on the import of lumber, furniture, and kitchen fittings with the intent of promoting local production and reducing reliance on imports.
In a proclamation on Monday, the president imposed a 10% tariff on imports of softwood lumber and timber, a 25% tariff on imports of kitchen cabinets and vanities, and a 25% tariff on upholstered wooden products.
The tariffs will take effect from October 14, Trump said. The levies are based on the findings of a Commerce Department investigation into lumber and furniture imports, which Trump had ordered earlier this year.
5. Nike to report
On the earnings front, Nike’s quarterly report after the closing bell on Tuesday will be in focus, with investors on the lookout for any progress in the athletic apparel group’s ongoing turnaround effort under new CEO Elliott Hill.
Hill returned to the helm of the brand last October to help overhaul a business weighed down by flagging sales, waning market share, and strategic mishaps which had dented its relations with retailers.
Fiscal first-quarter revenue is seen falling in the mid-single digits, as Hill targets investments in Nike’s running shoes and sneakers to rekindle demand.
But CFO Matthew Friend flagged in March that it would likely to take "several quarters" for the firm to clear out its inventory of older stock -- possibly through margin-threatening discounts. Nike has also said it plans to reduce its reliance on Chinese production in order to evade sweeping U.S. tariffs.
Still, signs of recovery around Nike have been emerging. Last week, executives at British sportswear retailer -- and major seller of Nike products -- JD Sports said they felt the U.S.-based company was doing "all the right things in terms of resetting" its operations.