German construction sector still in recession, civil engineering only bright spot
Investing.com - U.S. stock futures point higher, with markets watching an extended U.S. government shutdown which has led to the delay of key official data that was set to factor into an upcoming Federal Reserve interest rate decision. A top White House officials warns that mass federal layoffs could soon begin, as indications of a deal between Republicans and Democrats to reopen the government remain scarce. Elsewhere, alcoholic beverage group Constellation Brands is due to unveil its latest quarterly earnings, while hardline conservative Sanae Takaichi is picked by Japan’s ruling party as its next leader.
1. Futures higher
U.S. stock futures climbed on Monday, as investors kept tabs on an ongoing federal shutdown in Washington and awaited both a Federal Reserve interest rate decision and the arrival of the third-quarter earnings season later this month.
By 03:10 ET (07:10 GMT), the Dow futures contract had risen by 86 points, or 0.2%, S&P 500 futures had gained 20 points, or 0.3%, and Nasdaq 100 futures had advanced by 103 points, or 0.4%.
The main averages on Wall Street had a volatile session on Friday, with the benchmark S&P 500 and blue-chip Dow Jones Industrial Average notching record closing highs, while the Nasdaq Composite edged down by 0.3%.
Weighing on the tech-heavy index was a dip in shares of chip equipment maker Applied Materials (NASDAQ:AMAT), which forecast a $600 million dent to its fiscal 2026 revenue last week.
2. White House official warns of potential start to mass federal layoffs
A partial shutdown of the U.S. government has also led to the delay of official economic data, including the all-important nonfarm payrolls report.
These postponements have in turn contributed to heightened scrutiny of private-label economic figures over the last few days. Trackers of private employment and business activity, in particular, signaled "darkening storm clouds" and elevated inflation ahead, analysts at Vital Knowledge said in a note.
The absence of official data has also taken on more importance with the Fed set to unveil a fresh interest rate decision in October. Last month, the central bank slashed rates in a bid to bolster a softening labor market, albeit at the risk of reigniting price pressures. Despite the lack of government numbers, markets are still widely anticipating that the central bank will opt to roll out more borrowing cost reductions at its next policy meeting, according to CME’s FedWatch Tool.
All the while, the shutdown drags on, with Republicans and Democrats at an impasse over healthcare assurances. On Sunday, a top White House official warned that mass layoffs of federal workers will begin if President Donald Trump decides that talks with congressional Democrats to end the shutdown are "absolutely going nowhere."
3. Constellation Brands earnings ahead
On the earnings front, Constellation Brands is due to post its August quarter returns after the closing bell on Monday.
The alcoholic beverage maker missed both sales and income estimates during the prior quarter. Like many of its peers, Constellation has been grappling with the twin blows of Trump’s rising tariffs on aluminum and broader economic uncertainty that has led some shoppers to rein in purchases of beers and wines.
Meanwhile, a sweeping crackdown on immigration was cited as one possible driver of a significant slowdown in beer consumption, particularly among Hispanic consumers.
These trends have threatened to compound a demand environment for the industry that was already tepid.
4. Surprise leadership win for Japan’s Takaichi
Japanese stocks led gains across Asian markets on Monday, with the Nikkei skyrocketing to record highs after fiscal dove Sanae Takaichi’s weekend election win fueled bets that more fiscal spending and stimulus could be coming from Japan’s government.
Takaichi won the leadership of the Liberal Democratic Party in a run-off election held over the weekend, and is now poised to become Japan’s first female prime minister. A parliamentary session on the matter is set to convene in mid-October.
Takaichi was viewed as the most dovish among the five front-runners for LDP leadership.
She has called for more fiscal spending and tax relief to prop up what she sees as a fragile Japanese economy, and is widely expected to discourage the Bank of Japan from raising interest rates further.
5. Oil rises after smaller-than-expected OPEC+ output hike announcement
Oil prices rose sharply on Monday, rebounding from heavy losses last week, after the Organization of the Petroleum Exporting Countries and its allies agreed to a smaller-than-expected output increase for November that eased some market fears of a global supply glut.
At its meeting on Sunday, the producer alliance, known as OPEC+, said it would raise production by 137,000 barrels per day (bpd) in November, matching the increment approved for October.
That fell well short of the up to 500,000 bpd increase some market participants had anticipated, a prospect that had partially fueled last week’s sell-off.
The decision provided relief to traders who had feared a flood of new barrels would overwhelm fragile demand. OPEC+, which has already added more than 2.7 million bpd of supply this year, has been gradually unwinding the record cuts put in place during the pandemic.