Investors bet on ECB interest rate reduction
U.S. stock index futures rose on Monday as expectations grew of a new wave of stimulus by the European Central Bank (ECB) later this week. Money markets expect the ECB to announce a rate reduction at its meeting on Thursday, as part of a broader package to prop up the ailing Eurozone economy.
“ECB watchers are confident there could be a 20 bps cut and so the potential surprise (for the euro) on the rate cut isn’t that big,” Reuters quoted Commerzbank analyst Esther Maria Reichelt as saying.
At 5:23 a.m. ET, the blue-chip Dow futures were up 45.5 points, or about 0.17% to 26,835.5. Futures on the tech-heavy Nasdaq 100 futures indicated a gain of 13.37 points, or roughly 0.17% to 7,871.12 while those on the broader S&P 500 rose 5.87 points, or around 0.2% to 2,986.62.
China posts dismal economic data
China’s exports to the U.S. fell 16% to $44.4 billion in August, according to official data released on Sunday. Meanwhile, imports of U.S. products contracted 22% to $10.3 billion on a year-over-year, as both economic giants announced a new round of tit-for-tat tariffs.
The disappointing figures raise the expectations that Chinese authorities are likely to unveil additional stimulus measures to support economic growth.
JP Morgan creates ‘Volfefe Index’ to gauge impact of Trump tweets on markets
JP Morgan analysts have introduced the ‘Volfefe Index’ to measure how President Donald Trump’s Twitter activity moves financial markets and impacts interest rates. The index is inspired by Trump’s viral “covfefe” tweet during the early days of his presidency.
Analysts found that the number of market-moving Trump tweets has increased in the past month, triggering more volatility. They also concluded that tweets with some of the words he frequently uses such as ‘China,’ ‘products,’ ‘great,’ ‘democrats,’ and ‘billion,’ are most likely to weigh on prices.