US stock futures inch up as September begins with metals rally

US equity futures posted a modest advance on Monday, signaling a calmer start to a historically volatile month for Wall Street. Contracts linked to the S&P 500 and the Nasdaq 100 each added about 0.1% in light electronic trading, with cash markets shuttered for the Labor Day holiday.

Mixed equity picture across regions

European shares tracked the positive tone. The Stoxx 600 rose 0.2%, supported by defense names after reports that European officials are preparing detailed plans for potential post-conflict deployments in Ukraine. BAE Systems and Rheinmetall led sector gains.

In Asia, performance diverged sharply. Alibaba Group surged 19% after regulators finalized a long-awaited corporate overhaul, while semiconductor makers slid amid concerns about oversupply. Japanese equities were broadly steady even as the nation recorded its hottest August on record, according to the Japan Meteorological Agency.

Commodities outperform while bonds soften

Precious metals attracted fresh demand. Silver topped $40 an ounce for the first time since 2011, and gold moved closer to its all-time peak on expectations of lower US borrowing costs. European sovereign bonds weakened, pushing yields higher a week before France faces a confidence vote that could threaten the government. The spread between 10-year French and German yields hovered near 79 basis points; some strategists anticipate a test of the 100-basis-point level.

The dollar was little changed against major peers, while oil prices traded in a tight range ahead of the week’s economic data releases in the United States.

Key data and policy decisions ahead

Investors face a dense calendar over the next three weeks, including the August jobs report, consumer-price data and the Federal Reserve’s policy meeting on 17 September. According to CME Group’s FedWatch tool, markets are overwhelmingly positioned for a quarter-point rate cut, reflecting views that cooling inflation and softer hiring will allow policymakers to pivot.

Fed funds futures currently imply more than 140 basis points of easing by the end of 2026. That amount of stimulus has historically occurred only around recessions, Deutsche Bank economists noted in a recent report.

Evercore ISI strategists advised clients not to be unsettled by short-term pullbacks, projecting a 20% advance in the S&P 500 by end-2026. They see interim volatility as an opportunity to increase exposure.

September’s reputation tested again

September is typically the weakest month for US equities, with tariff disputes, political uncertainty and questions about Fed independence adding layers of risk this year. Still, the bar to derail a near-term rate cut remains high. “Unless incoming data surprises decisively to the upside, policy support is likely,” said analysts at IG in Paris, who also warned that widening French-German yield spreads could ignite profit-taking in European bank stocks.

Market participants will parse Wednesday’s U.S. Bureau of Labor Statistics job-openings survey for clues on labor-market slack, followed by Friday’s nonfarm payrolls. Any signs of cooling momentum may reinforce expectations of looser monetary policy and extend the current bid for precious metals.

With global equities near record highs and metals breaking decade-long barriers, traders enter September balancing optimism about policy support against the month’s challenging track record.

For additional analysis on preparing portfolios for shifting rate cycles, visit our Investing for the Future section.

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Image credit: Bloomberg