U.S. futures are looking really ugly this morning as world stocks sink to year low
U.S. futures extended losses, with contracts on the Dow Jones Industrial Average off more than 400 points, after results from Caterpillar and 3M added to concern that corporate profits have peaked. The yen, gold and Treasuries all rose on demand for haven assets.
The sell-off in U.S. equities put the S&P 500 Index on track for its 12th loss in 14 days as investors grow concerned that the trade war and rising interest rates have put an end to runaway expansion of corporate profits. Caterpillar sank 6 per cent in early trading after flagging concern over rising materials costs, while 3M dropped 5 per cent after cutting its forecast.
The Stoxx Europe 600 Index slid toward the lowest level since December 2016 as Asian equities teetered on the verge of a bear market. Some of the steepest losses were in Japan, Hong Kong and China, where shares had posted the biggest jump in more than two years a day earlier.
Disappointing earnings from Renault and some European tech companies added to the pain in Europe. Gold headed for its highest close in three months and benchmark Treasury yields dropped to 3.16 per cent.
Investor nerves are on full display in the flight to quality beginning to take shape after global equities tried and failed to stem this month’s declines. U.S. growth data later in the week as well as earnings from companies including Amazon, Alphabet, Microsoft and Intel could be key to how far much further the drop will go. In the meantime, uncertainty over the death of a Saudi journalist, Italy’s budget and Brexit are among the factors weighing on sentiment.
“Global financial markets continue to struggle to rally as various geopolitical concerns weigh on investor confidence,” Nick Twidale, chief operating officer at Rakuten Securities Australia, said in a note. “With the rest of the world looking much more pessimistic in the current environment,” markets were poised for “a firm correction,” he added.
Equities failed to get any reprieve after China announced fresh measures to ease the funding strains of private companies, as top officials seek to restore confidence in the world’s second-largest economy. The State Council announced it would support bond financing by private firms, and said the central bank will provide funding to facilitate this.
Elsewhere, oil traded near the lowest in almost five weeks. Emerging-market equities slumped as Turkish President Recep Tayyip Erdogan said a team including Saudi generals conducted the killing of writer Jamal Khashoggi.
These are the main moves in markets:
Futures on the S&P 500 Index sank 1.4 per cent as of 8:21 a.m. New York time, hitting the lowest in 16 weeks with their fifth consecutive decline. The Dow contracts dropped as much as 450 points.The Stoxx Europe 600 fell 1.1 per cent. The U.K.’s FTSE 100 declined 0.9 per cent. Germany’s DAX Index dropped 1.7 per cent higher, the fifth straight decline.The MSCI Emerging Market Index dipped 1.9 per cent.The MSCI Asia Pacific Index slumped 2.1 per cent.
The Bloomberg Dollar Spot Index dropped 0.2 per cent.The euro gained 0.2 per cent to $1.1481.The British pound rose 0.5 per cent to $1.3028.The Japanese yen strengthened 0.5 per cent to 112.24 per dollar.
The yield on 10-year Treasuries dropped five basis points to 3.15 percent, while the two-year note yield fell three basis points to 2.88 percent. Germany’s 10-year yield fell two basis points to 0.43 per cent.
West Texas Intermediate crude fell 1.6 per cent to US$68.06 a barrel, the first drop in three days. Gold gained 1.3 per cent to $1,237.57 an ounce.