(Bloomberg) -- US equity-index futures fell as the OPEC+ alliance’s plan to cut oil supply stoked inflation fears and as traders awaited labor-market data to gauge the risk of recession.
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Futures on the S&P 500 and Nasdaq 100 each dropped 0.6%, while Europe’s Stoxx 600 erased an advance. US crude futures held on to weekly gains of about 11% after the oil cartel said it would cut daily output by 2 million barrels. Treasuries were steady, with the two-year rate hovering about the 4.15% level. In New York premarket session, Twitter Inc. traded 7% below Elon Musk’s offer price.
While higher energy prices could stoke inflation, some investors speculated they’ll reduce demand and hit company earnings -- potentially encouraging the Federal Reserve to slow monetary tightening. While such expectations fueled equity gains this week, several money managers are cautioning that the economic path to a less aggressive Fed could be painful.
“If you want to preempt the Fed, you are playing a very high-stakes game,” said Kenneth Broux, a strategist at Societe Generale SA. “The Fed do not want financial conditions to loosen; they don’t want equity markets to take off and get too comfortable.”
West Texas Intermediate futures traded near $88 a barrel, while Brent crude held near $93.30. The output-cut plan drew a warning from the White House about negative effects on the global economy. Goldman Sachs Group Inc. increased its fourth-quarter price target for Brent to $110 a barrel.
In Europe, the Stoxx 600 drifted lower as losses for energy and insurance stocks offset advances in real estate and travel shares. Shell Plc tumbled 4.6% after the energy giant pointed to a weaker third-quarter performance.
Investors are wary of placing large-scale equity bets as they await a report on US initial jobless claims later Thursday and the official nonfarm payrolls data Friday. A Bloomberg survey shows the US economy will have added 260,000 jobs last month; a higher-than-anticipated number may spook markets.
Fed officials have been at pains to stress that market anticipation of rate cuts next year is misplaced, a point San Francisco Fed President Mary Daly reiterated in an interview on Bloomberg Television. The bank aims to keep policy tight to secure 2% inflation, she added.
The dollar swung between gains and losses Thursday. Britain’s pound slipped 0.4% and gilt yields rose after Fitch Ratings lowered its outlook on the nation to negative.
Key events this week:
US initial jobless claims, Thursday
Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
US unemployment, wholesale inventories, nonfarm payrolls, Friday
BOE Deputy Governor Dave Ramsden speaks at event, Friday
Fed’s John Williams speaks at event, Friday
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Some of the main moves in markets:
Stocks
Futures on the S&P 500 fell 0.6% as of 5:56 a.m. New York time
Futures on the Nasdaq 100 fell 0.6%
Futures on the Dow Jones Industrial Average fell 0.5%
The Stoxx Europe 600 fell 0.1%
The MSCI World index was little changed
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $0.9891
The British pound fell 0.4% to $1.1282
The Japanese yen was little changed at 144.70 per dollar
Cryptocurrencies
Bitcoin rose 0.7% to $20,136.02
Ether rose 1% to $1,358.63
Bonds
The yield on 10-year Treasuries was little changed at 3.76%
Germany’s 10-year yield was little changed at 2.03%
Britain’s 10-year yield advanced seven basis points to 4.11%
Commodities
West Texas Intermediate crude was little changed
Gold futures rose 0.2% to $1,723.80 an ounce
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