S&P 500 Nears Record High as Fed Speakers Awaited

The S&P 500 is up 19% year-to-date and gained 1% in September so far, with markets expecting another potential rate cut from the Federal Reserve in November, futures for Wall Street and European indices are all trading higher. Investors are also watching for speeches from several Fed policymakers this week, as well as inflation data due on Friday.

Equities

The FTSE 100 fell 1.2% on Friday, marking its biggest one-day drop in almost seven weeks. The midcap FTSE 250 index was down 1.6%, with both indices posting weekly losses. The decline was driven by stronger-than-expected retail sales data, which rose by 1% in August, beating forecasts of a 0.4% rise. This gave an extra boost to the British pound, which has reached its highest level against the dollar since 2022. The rising pound added pressure on export-oriented companies, with Burberry shares falling 3.5% after a downgrade by Jefferies, which cited ongoing challenges in the luxury goods sector. Dr Martens also saw a sharp drop, losing over 19% after a block trade priced its shares below their last close.

On Wall Street, all three major US stock indices finished the week higher, close to record highs, despite mixed performances on Friday. The Dow Jones rose 0.09%, while the S&P 500 dipped 0.19%, and the Nasdaq fell 0.36%. Nike led gains on the Dow, with shares climbing after announcing that former executive Elliott Hill would return to replace John Donahoe as CEO. Utilities stocks outperformed in the S&P 500, with Constellation Energy surging over 20% after securing a deal with Microsoft to reopen part of a nuclear plant to power AI projects.

In other markets, the MSCI world stock index dipped 0.21%, following Thursday’s record high. The dollar firmed, supported by a recovery against the yen after comments from Bank of Japan Governor Kazuo Ueda. Brent crude futures settled down 0.52%, while US WTI crude fell 0.4%.

Forex & Commodities

Global stocks firmed in Asian trading, buoyed by expectations of further rate cuts from major central banks. Futures trading on Tokyo's Nikkei index showed gains, with futures at 38,510, up from a cash close of 37,723. MSCI’s Asia-Pacific shares outside Japan added 0.3%, with Singapore's main index climbing to its highest since 2007.

In Europe, FTSE futures gained 0.3%, DAX futures were up 0.4%, and Eurostoxx 50 futures added 0.5%, pointing to a firm opening for European stocks. Over in the US, S&P 500 futures climbed 0.3%, and Nasdaq futures rose 0.6%, as Wall Street continued to benefit from last week's Federal Reserve rate cut. The S&P 500 has risen 19% year-to-date, hitting all-time highs, with investors now eyeing another possible 50-basis-point cut in November.

Gold continued its rally, reaching a record high of $2,630.93 an ounce, supported by the lower US interest rates and tensions in the Middle East. Oil prices also firmed, with Brent crude rising 60 cents to $75.09 a barrel and US crude up 63 cents at $71.63 per barrel. The rise in oil prices comes amid concerns about supply disruptions from the Middle East, where Israel launched airstrikes against Hezbollah. Tensions in the region, alongside the US rate cut, have supported the recent upswing in oil, which gained around 4% last week.

In currency markets, the US dollar edged up 0.3% against the yen, reflecting a continued recovery from last week’s lows. The euro held firm at $1.1160. Investors are now focused on upcoming inflation data and central bank meetings in Switzerland and Sweden, where further rate cuts are expected.