Stock Futures Waver Amid Energy, Inflation Concerns

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Investors look at earnings season, while oil prices rise

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The stock index has been dragged down in recent weeks in choppy trading. Investors are grappling with an energy crisis that threatens to add to inflationary pressures as soon as there are signs that global economic growth is slowing.

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Concerns about China’s struggling real estate sector continue. Days after the company failed to pay its $206 million in bonds, two board members of embattled developer Fantasia resigned. Its troubles have added to concerns that the woes of China’s property sector have extended beyond Evergrande, whose failure to meet debt payments raised concerns about renewed pressure on the world’s second-largest economy.

West Texas Intermediate, the US oil benchmark, rose 0.2% to $80.83 a barrel, its highest level since 2014, as oil prices continued to rise on Tuesday. International benchmark Brent crude rose 0.4% to $83.92 a barrel. Crude oil prices have risen in recent weeks amid a worldwide shortage of natural gas.

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Investors are looking to the third quarter earnings season, which begins this week, for clues about how companies are performing with price increases. Some of America’s biggest banks, including JPMorgan Chase and BlackRockhandjob

Reporting seasons are set to begin on Wednesday.

“The main theme will be inflation, there is some real concern about a winter of discontent,” said Brian O’Reilly, head of market strategy for Mediolanum International Funds. “We could see some volatility if companies don’t get the communication right on their cost pressures.”

On Tuesday, investors also await the International Monetary Fund’s World Economic Outlook report, which should provide insight into the faltering post-pandemic recovery. US data on job openings and labor turnover are due at 10 a.m. ET.

The yield on the benchmark 10-year US Treasury note rose to 1.612% on Tuesday from 1.604% on Friday. US bond markets were closed on Monday for a federal holiday. Yields, which rise when bond prices fall, have been on an upward trajectory since the Federal Reserve signaled strongly last month that it may begin to reduce its bond purchases as early as November.

The pan-continental Stokes Europe 600 index fell 0.1% on Tuesday, led by overseas, automotive and mining companies.

In Asia, stock markets were largely down. In Japan, the Nikkei 225 fell 0.9%, while the Hang Seng index in Hong Kong fell 1.4%. In mainland China, the Shanghai Composite Index fell 1.3%.

Write to Will Horner at [email protected]

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