U.S. stock futures tick higher to start a week rich with inflation and central bank catalysts

What’s driving markets

Equity index futures were struggling to gain traction at the start of a week in which inflation, and the monetary authorities’ campaigns to combat it, will be to the fore.

The caution follows a poor performance over the past several sessions as investors continue to fret about higher borrowing costs and their impact on the economy and company earnings.

The S&P 500 is up 10% from the 2022 low but remains down 17.5% for the year to date in the face of the Federal Reserve raising interest rates by 375 basis points since March.

“The recovery in global risk appetite faltered last week, especially in the U.S., where the major indices suffered their biggest setback since September. This week’s agenda is packed with major macro updates that will test sentiment further,” said Ian Williams, strategist at Peel Hunt.

Most important will be the U.S. consumer prices data on Tuesday, followed the day after by the Federal Reserve’s interest rate decision, when the central bank is expected to hike rates by another 50 basis points to a range of 4.25% to 4.50%. That would mark a downshift in the size of interest-rate increases after the Fed delivered a series of 75 basis point hikes.

Equity bulls will be hoping inflation can show further signs of cooling, thereby helping the Fed shift to a less aggressive tightening cycle. However, some analysts warned that after last week’s producer prices report came in hotter than expected there is a danger investors may be caught out by a stonger-than-forecast consumer prices index.

“Because the consensus number is relatively low, we may have another Friday’s PPI-like disappointment at tomorrow’s U.S. CPI release, which could further boost the Federal Reserve (Fed) hawks before Wednesday’s FOMC decision, fuel the U.S. dollar, send the U.S. yields higher and the stocks lower,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Traders also have rate announcements from the European Central Bank and Bank of England to consider, both due Thursday. U.K. inflation data, with the year-over-year rate currently at a 40-year high of 11.1%, is set to published the day before.

U.S. economic updates set for release on Monday include the New York Fed 1 and 5-year inflation expectations for November, due at 11 a.m. The federal budget for November will be published at 2 p.m., all times Eastern.

Companies in focus

• Amgen Inc. 
  AMGN,
  -2.42%
  agreed to acquire Horizon Therapeutics Plc
  HZNP,
  +0.39%
  in an all-cash deal valued at $27.8 billion, confirming earlier reports and a deal that was first mooted in November. Horizon shares jumped more than 15% in premarket trade, while Amgen shares fell 2.2%.

• Weber Inc.
  WEBR,
  -0.31%
  announced Monday morning that it has reached an agreement with BDT Capital Partners to be taken private. Funds managed by BDT Capital will purchase all of the Weber shares they don’t already own for $8.05 a share in a deal that assigns the maker of barbecue grills a $3.7 billion enterprise value. Weber shares rose 22%.

• Microsoft Corp. 
  MSFT,
  -0.80%
  on Monday said it was taking a 4% stake in the London Stock Exchange Group 
  LSEG,
  +2.11%
  in a deal that will see the stock exchange use the software giant’s data and cloud infrastructure. LSE shares rose more than 2% in London, while Microsoft shares were up 0.6% in premarket trade.