➤ U.S. futures rise on cue from European stocks.
➤ Fed minutes in focus.
➤ Italy braces for new coalition or fresh elections.
Wall Street looked set to rebound from yesterday's losses after broad gains in European shares amid stimulus hopes and as investors awaited the minutes of the Federal Reserve's last monetary policy meeting today and a speech on Aug. 23 from Chair Jerome Powell.
The minutes from the Fed's July meeting "are likely to give markets an insight into the discussions over the need for a cut," and whether a bigger reduction of 50 basis points was discussed, according to Michael Hewson, chief market analyst at CMC Markets UK. The Fed lowered rates by 25 basis points in July.
The Kansas City Fed's annual economic policy symposium, where Powell will speak, is set to begin in Jackson Hole, Wyo., on Aug. 22.
Markets are speculating that Powell could pave the way for further easing, and while the door for more action should remain open, "we do not think Powell will paint the Fed into a corner again, not when the data suggest otherwise," Win Thin from Brown Brothers Harriman said in a note Aug. 19.
On Aug. 20, U.S. President Donald Trump said that his administration is exploring additional economic stimulus in the form of payroll and capital gains tax cuts, but noted that no action is imminent.
S&P 500 futures rose 0.7% at about 6:45 a.m. ET, while Nasdaq 100 futures gained 0.8%.
In Europe, the Euro Stoxx 50 added 1.2%. The FTSE 100 and Germany's DAX index both added 1.1% and France's CAC 40 climbed 1.4%.
In Asia, Japan's Nikkei 225 index fell 0.3%. Hong Kong's Hang Seng index edged 0.2% higher while the Shanghai SE Composite was largely flat after Trump reportedly said that he had to take an action against China over trade despite short-term harm to the U.S. economy as Beijing had been cheating Washington for years.
Sterling fell 0.4% against the dollar after a leaked government report showed that a no-deal Brexit could cause disruption to the U.K.'s financial services, and possible shortages of food and medicines.
The euro was broadly stable, while the Japanese yen depreciated 0.2% against the dollar.
In the bond market, Treasurys dipped, pushing 10-year yields 3 basis points higher to 1.59%, rising from an almost three-year low of 1.53% on Aug. 15.
Ten-year yields on Italian government bonds slipped 4 basis points to 1.33%, the lowest level since October 2016, after Giuseppe Conte stepped down as prime minister, paving way for the formation of a new coalition or fresh elections.
A coalition between the Five Star Movement and Democratic Party is likely to introduce greater fiscal discipline, "but its lifespan would probably be short," said Matteo Ramenghi, chief investment officer for Italy at UBS GWM. "Conversely, should elections take place, a win by the center-right might prove more market friendly than the current government, but the prospect of a populist win would lead to a bumpy ride for Italian assets."
Yields on German Bunds climbed 2 basis points to negative 0.67%. They touched a record-low negative 0.70% on Aug. 15.
Among commodities, Brent crude oil rose 1.4% to $60.89 per barrel on the ICE Futures Exchange. Gold spot dipped 0.4% to $1,501.47 per ounce.
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The day ahead:
8:30 a.m. ET — Canada CPI (Econoday consensus: 0.2% monthly, 1.7% yearly)
10 a.m. ET — U.S. existing home sales (Econoday consensus: 5.380 million)
10:30 a.m. ET — U.S. EIA petroleum status report
2 p.m. ET — U.S. FOMC minutes
