OPENING CALL

Stock futures edged lower on Tuesday with a light calendar for earnings and economic data ahead and as investors regrouped after the past few days' rollercoaster ride for markets.

Investors were positioning for Wednesday's inflation report, which could shape expectations for next week's Federal Reserve decision. Most predict the central bank to deliver a quarter-point interest-rate cut, but recent signs of economic weakness have led some to bet on a bigger dose of easing.

Meanwhile there's a lot riding on Tuesday's televised debate between Kamala Harris and Donald Trump.

Taxes, immigration and tariffs are likely to be among the issues watched for their potential effect on the economy and the biggest impact would be likely felt if either party sweeps the election-taking the presidency and both houses of Congress-enabling it to pass an ambitious agenda.

Oppenheimer gave clients its top picks in such a senario.

Premarket Movers

Apple: The EU's top court upheld an order allowing Ireland to recoup more than $14 billion, plus interest, in taxes from Apple. Its shares fell 1%.

Alibaba's U.S.-listed shares rose after it was included in a program that makes it easier for mainland Chinese investors to buy the stock.

Hewlett Packard Enterprise begun a $1.35 billion stock sale to fund its purchase of Juniper Networks. HPE shares fell 5%.

Oracle's quarterly results topped expectations, as its partnership with Nvidia boosted revenue. Oracle shares rallied 9%.

Trump Media & Technology shares rose 3%. The stock has climbed this week ahead of the first debate between Trump and Harris.

Watch For:

NFIB Index of Small Business Optimism; Johnson Redbook Retail Sales Index; API Weekly Statistical Bulletin; Bank of Canada Governor Tiff Macklem speech in London.

Petco, GameStop and Dave & Buster's are expected to report earnings Tuesday.

Today's Headlines/Must Reads:

- The Shadow Dollar That's Fueling the Financial Underworld

- Sunbelt Manufacturing Boom Lures Property Investors

- What Must Kamala Harris Do to Win Over Moderates? Joe Manchin Has Advice

MARKET WRAPS

Forex:

The dollar was steady ahead of the presidential debate, and UniCredit thinks the currency will probably be more favored under a Trump presidency since he might favor more tax relief to boost growth, a more protectionist stance on trade and more isolationist foreign policy.

However, other factors could affect the dollar more materially in the meantime such as the size of the interest-rate cut the Fed is expected to deliver on September 18, UniCredit said.

Sterling rose as U.K. employment data support expectations for the Bank of England to cut interest rates more cautiously compared to the Federal Reserve, ING said.

The jobs data are "notoriously volatile" but should maintain the wedge between expected BOE and Fed rate cut cycles, ING added.

"For the remainder of this year, markets price 107 basis points of Fed cuts versus just 48 basis points for the BOE."

Bonds:

Recent moves in Treasurys and yield curves appear more pronounced compared to the average and median of comparable past historical periods, UBS said.

"Bond markets typically rally into a Fed cut, but the recent rally has been large relative to past cycles, with the rally in 10-year [Treasurys] over the past month the largest one in recent history."

Current market pricing also seems more excessive relative to the three most recent cycles of Fed rate cuts, it added.

This week's debt issuance starts with a three-year note auction on Tuesday, but longer-dated supply in the coming days are likely to get more attention, Pepperstone said.

It said recent auctions have been largely straightforward, expecting this week's 10- and 30-year auctions to attract more attention.

Energy:

Oil prices were lower on signs of persistently weak demand in China and despite disruptions caused by tropical storm Francine in the Gulf of Mexico.

The latest Chinese data showed consumer inflation rose less than expected in August, while crude oil imports rebounded from July but remained weak on a seasonal basis.

Meanwhile, oil-and-gas producers in the Gulf of Mexico started shutting some platforms and evacuating workers ahead of the expected hurricane. At least 125,000 barrels a day of oil capacity is at risk of being disrupted, ANZ Research said, citing data from the National Hurricane Center.

Traders now await monthly report from the EIA and OPEC later on Tuesday for more insights into supply and demand trends.

Metals:

Gold has continued to hover around the $2,500 mark as traders await more clues on the size of the Fed's expected interest-rate cut later this month, with the focus on this week's U.S. CPI and PPI data.

"Powell and the Fed have already locked in a 25 basis point hike for the Sept. 18th FOMC decision," Peak Trading Research said, adding the question now is whether the central bank will opt for a bigger 50 basis point cut.

Iron Ore

Iron-ore prices should find support around $85/metric ton from mining costs, Morgan Stanley said, adding that the level appears to be the cost curve's 90th percentile-or marginal cost of production-according to latest Wood Mackenzie cost data.


TODAY'S TOP HEADLINES


WuXi Companies Say They're Not a Security Risk as U.S. House Passes Draft of Biosecure Act

The U.S. House of Representatives took another step to curb Chinese companies' U.S. operations by passing a draft of the Biosecure Act, prompting China-based biotech company WuXi AppTec and its affiliate to again deny they are threats to security.

The draft bill, which designates the WuXi companies as a "biotechnology company of concern," is preemptive and unjustified without due process, WuXi AppTec and WuXi Biologics said Tuesday.


AngloGold Ashanti to Buy Centamin for $2.5 Billion

AngloGold Ashanti agreed to buy smaller British peer Centamin in a deal valuing it at $2.5 billion as the South African miner seeks to boost its portfolio by adding one of the world's largest producing gold mines amid surging prices for the precious metal.

AngloGold Ashanti, which is among the world's top gold producers, said Tuesday that the transaction values each Centamin share at 163 pence, representing a 36.7% premium to Monday's closing price.


Bonds Signal Largest Rate Cuts Since '08 Crisis. What It Means for Stocks.

The U.S. bond market is signaling that traders expect the most significant shift in monetary policy since the 2008 financial crisis in the next two years.

The proof rests in a rarely watched spread. As of Friday, the gap between the 2-year Treasury yield and the effective federal-funds rate, or EFFR, reached negative 167.9 basis points-the widest negative differential since January 2008's level of negative 182.7 basis points, or 1.827 percentage point. Assuming the EFFR didn't move significantly on Monday, the spread ended the day at negative 166.4 points, still significantly wide. The 2-year yield reflects expectations for future short-term rates. It has been falling as Federal Reserve officials have clearly communicated that they will cut interest rates during next week's meeting of the Federal Open Market Committee. The EFFR, meanwhile, is the average of what banks charge one another for overnight loans. It is based on current interest rates.


U.S. Dividends Grew 9% in the Second Quarter. Meta and Alphabet Gave a Boost.

Dividends are no longer just for utilities, real estate companies, and other more "boring" value-oriented sectors of the market.

Alphabet and Meta Platforms started paying dividends for the first time earlier this year, and that helped lead to a big boost in the overall amount of dividends from U.S. companies, according to a report released Monday by Janus Henderson Investors.


Chinese Exports Rose in August Despite Growing Trade Barriers

China's exports in August beat expectations and accelerated despite growing trade barriers, giving Beijing a little breathing room in its efforts to lift domestic demand and reawaken the anemic economy.

Outbound shipments in August rose 8.7% compared with the same period a year earlier, picking up from July's 7.0% increase, the General Administration of Customs said Tuesday. That beat the 6.6% growth tipped by a Wall Street Journal poll of economists.


More Ukrainians Want to Negotiate an End to the War. Soldiers Don't Agree.

Two-and-a-half years into the war, with tens of thousands dead and Russia advancing in the east, some Ukrainians are asking a question that had until recently been taboo: Is it time to try to negotiate?

Opinion polls show that support for some kind of negotiations with Moscow has been creeping upward since Ukraine's counteroffensive last year failed to retake significant territory-though a majority of Ukrainians still say they want to keep fighting to retake all Russian-occupied land. Ukrainian President Volodymyr Zelensky said he hopes to use the territory Kyiv has seized in Russia's Kursk region as leverage for a peace deal.


Write to clare.kinloch@wsj.com

TODAY IN CANADA

Earnings:

Nothing major scheduled

Economic Indicators:

Nothing major scheduled


Expected Major Events for Tuesday

04:01/US: 4Q Manpower U.S. Employment Outlook Survey

06:00/GER: Aug CPI

06:00/JPN: Aug Preliminary Machine Tool Orders

06:00/UK: Aug UK monthly unemployment figures

08:00/ITA: Jul Industrial Production

08:30/UK: 2Q Mortgage Lenders and Administrators Return (MLAR) statistics

10:00/US: Aug NFIB Index of Small Business Optimism

12:55/US: 09/07 Johnson Redbook Retail Sales Index

14:00/US: 2Q Quarterly Financial Report - Industry

14:00/US: 2Q Quarterly Financial Report - Retail Trade

20:30/US: API Weekly Statistical Bulletin

All times in GMT. Powered by Kantar Media and Dow Jones.


Expected Earnings for Tuesday

ASA Gold & Precious Metals Ltd (ASA) is expected to report for 2Q.

Academy Sports & Outdoors Inc (ASO) is expected to report $1.97 for 2Q.

(MORE TO FOLLOW) Dow Jones Newswires

09-10-24 0630ET