Stock Market Update

Equity futures point to a modestly higher opening this morning after a Friday session that saw the major averages finish lower but still capture gains for the week.

Much of last week's action was driven by monetary policy expectations, with the market now fully pricing in a 25-basis point rate cut at the September FOMC meeting after continued softness in the labor market. 

Price stability will be at the forefront of focus this week, with the market receiving the August PPI report on Wednesday and the August CPI report, the Fed's preferred inflation gauge, on Thursday.

Though a September rate cut is all but locked in, hotter-than-anticipated inflation readings could dampen expectations of further cuts in October and December. Fed Governor Christopher Waller (FOMC voting member) noted last Wednesday that he expects to see a near-term uptick in inflation but expects it to fall back to the 2.0% target within six to seven months.

St. Louis Fed President Alberto Musalem (FOMC voting member) cautioned, however, that tariff-driven inflation could be more persistent than current forecasts suggest.

The market will be without any color from the Fed to assess this week's inflation data, with policymakers in the blackout period ahead of next week's FOMC meeting.

It will be a relatively light week for economic data otherwise, with Thursday's jobless claims report and Friday's preliminary reading of the University of Michigan Consumer Sentiment index being the other noteworthy data points.

Corporate headlines are quiet this morning, as only a small batch of companies is set to report earnings this week. 

On the trade front, Reuters reports that the U.S. is considering annual approvals of chip equipment sales to Samsung Electronics and SK Hynix factories in China.

In corporate news: 

• Alphabet (GOOG 236.45, +1.28, +0.5%) confirmed on Friday its plans to appeal a ruling by the EC that imposes a €2.95 billion fine and directs Google to cease and desist the alleged "self-preferencing" practices.
• Applovin (APP 535.76, +45.52, +9.3%) is set to join the S&P 500. 
• PNC (PNC 205.35, -0.05, -0.0%) confirmed plans to acquire Colorado-based FirstBank. 
• Robinhood Markets (HOOD 109.65, +8.40, +8.3%) is set to join the S&P 500. 
• UnitedHealth Group (UNH 319.00, +3.61, +1.1%) reaffirms FY25 EPS guidance ahead of investor and analyst meeting. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region began the week on a mostly higher note with Japan's Nikkei (+1.5%) returning to its high from August after Prime Minister Ishiba resigned. Japan's Nikkei: +1.5%, Hong Kong's Hang Seng: +0.9%, China's Shanghai Composite: +0.4%, India's Sensex: +0.1%, South Korea's Kospi: +0.5%, Australia's ASX All Ordinaries: -0.2%.

In news: 

• Japan's Prime Minister Ishiba will continue as caretaker prime minister until a new leader is named.
• Japan's Q2 GDP was comfortably ahead of expectations while China's trade surplus for August beat expectations, though import/export growth missed estimates.
• China will reopen its bond market to Russian energy firms looking to raise funds, according to The Financial Times. 

In economic data:

• China's August trade surplus $102.33 bln (expected surplus of $99.40 bln; last surplus of $98.24 bln). August Imports 1.3% yr/yr (expected 3.0%; last 4.1%) and Exports 4.4% yr/yr (expected 5.0%; last 7.2%)
• Japan's Q2 GDP 0.5% qtr/qtr (expected 0.3%; last 0.1%); GDP annualized 2.2% (expected 1.0%; last -0.2%). Q2 GDP Capital Expenditure 0.6% qtr/qtr (expected 1.3%; last 0.7%), Q2 GDP External Demand 0.3% qtr/qtr, as expected (last -0.8%), GDP Private Consumption 0.4% qtr/qtr (expected 0.2%; last 0.0%), and Q2 GDP Price Index 3.0%, as expected (last 3.3%). July Current Account surplus JPY1.88 trln (expected JPY2.60 trln; last JPY2.40 trln). July Economy Watchers Current Index 46.7 (expected 45.6; last 45.2)
• Australia's July Building Approvals -8.2% m/m, as expected (last 12.2%) and Private House Approvals 1.1% m/m, as expected (last -2.0%)

Major European indices are starting the week on a higher note. STOXX Europe 600: +0.3%, Germany's DAX: +0.5%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.5%, Italy's FTSE MIB: +0.3%, Spain's IBEX 35: +0.8%.

In news:

• French Prime Minister Bayrou is expected to lose today's confidence vote after just nine months in office.
• Swiss National Bank President Schlegel said that the central bank will not hesitate to act, but the bar for the next cut is high.
• Italy's Finance Minister Giorgetti said that the government continues expecting 0.6% growth for 2025.

In economic data:

• Eurozone's September Sentix Investor Confidence -9.2 (expected -2.2; last -3.7)
• Germany's July Industrial Production 1.3% m/m (expected 1.1%; last -0.1%); 1.5% yr/yr (last -1.8%). July trade surplus EUR14.7 bln (expected surplus of EUR15.7 bln; last surplus of EUR15.4 bln). July Imports -0.1% m/m (last 4.1%) and Exports -0.6% m/m (last 1.1%)
• Spain's July Consumer Confidence 82.9 (last 76.1)