U.S. stock futures edged higher on Monday as traders looked ahead to this week’s key inflation data and weighed the chances of a Federal Reserve rate cut. Political turmoil in France and Japan, along with a surge in oil prices, also influenced sentiment across global markets.
1. Futures Gain Ahead of Fed Decision
By 03:32 ET (07:32 GMT), S&P 500 futures rose 0.2%, Nasdaq 100 futures gained 0.4%, and Dow futures inched up 0.1%. Wall Street ended lower on Friday after a weaker-than-expected U.S. jobs report pointed to a slowing labor market.
The jobs data strengthened expectations that the Fed will cut rates by at least 25 basis points at its September 16–17 policy meeting. Some analysts even see a chance of a half-point move. Despite last week’s dip, the S&P 500 remains near record highs, though September is often a weaker month for stocks.
Market caution is also driven by Donald Trump’s tariff policies, rising bond yields, and questions over the sustainability of the AI-driven stock rally.
2. U.S. Inflation Report in Focus
The consumer price index (CPI) for August is due Thursday. Economists expect inflation to accelerate to 2.9% from July’s 2.7%, keeping it above the Fed’s 2% target.
That leaves policymakers juggling a cooling labor market with sticky prices, raising concerns about possible stagflation. Fed Chair Jerome Powell has suggested that the labor market may take priority, making a rate cut more likely.
The Fed is now in a quiet period before its meeting, so markets will rely on past comments and economic data to gauge the path ahead.
3. France Faces Confidence Vote
In Europe, Prime Minister François Bayrou faces a crucial confidence vote on Monday. Opposition parties are expected to reject his fiscal plan, likely forcing him to resign.
The plan aims to cut the budget deficit from 4.6% of GDP in 2025 to 2.8% by 2029 through spending cuts and reforms worth €43.8 billion. Proposals such as abolishing public holidays have fueled strong voter resistance.
French government bond yields have surged, with the 30-year yield reaching its highest level since 2009, reflecting investor uncertainty.
4. Japan Hit by Ishiba’s Resignation
Political instability also rose in Japan, where Prime Minister Shigeru Ishiba announced his resignation on Sunday. His decision came just weeks after his coalition suffered heavy losses in upper house elections.
Ishiba had recently secured a trade deal with the U.S., but his departure raises questions over Japan’s political direction. The yen weakened sharply against the dollar, though it later trimmed losses. Meanwhile, the Nikkei 225 index climbed, while Japanese bond yields stayed muted.
5. Oil Prices Jump
Oil prices surged on Monday after OPEC+ agreed to raise production at a much slower pace.
At 03:25 ET, Brent crude rose 1.7% to $66.59 per barrel, while WTI gained 1.7% to $62.92. The group will add 137,000 barrels per day in October, far less than the monthly hikes of more than 400,000 bpd earlier this year.
The modest increase comes as Saudi Arabia seeks to protect market share and stabilize oil prices after months of volatility.
