Stocks under pressure as global risks weigh on investors
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 global growth is faltering. The yen, gold and Treasuries all rose on demand for haven assets.
The selloff 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:
Stocks
Futures on the S&P 500 Index sank 1.5 per cent as of 7:46 a.m. New York time, hitting the lowest in 16 weeks with their fifth consecutive decline. The Dow contracts dropped 425 points. The Stoxx Europe 600 Index fell 1 per cent, reaching the lowest in more than 22 months on its fifth consecutive decline. The U.K.’s FTSE 100 Index fell 0.6 per cent to the lowest in more than a week on the largest fall in more than a week. Germany’s DAX Index sank 1.6 per cent, reaching the lowest in more than 22 months on its fifth straight decline. The MSCI Asia Pacific Index fell 2.1 per cent to the lowest in more than 17 months on the largest fall in more than a week. The MSCI Emerging Market Index fell 1.9 per cent to the lowest in more than a week on the biggest fall in more than a week.
Currencies
The Bloomberg Dollar Spot Index fell less than 0.05 per cent. The euro decreased 0.1 per cent to $1.1457. The British pound increased 0.1 per cent to $1.2974. The Japanese yen jumped 0.4 per cent to 112.33 per dollar, the biggest increase in almost two weeks.
Bonds
The yield on 10-year Treasuries sank five basis points to 3.15 per cent, the lowest in more than a week on the largest tumble in almost four weeks. Germany’s 10-year yield decreased two basis points to 0.43 per cent. Britain’s 10-year yield dipped three basis points to 1.498 per cent, the lowest in almost six weeks. The spread of Italy’s 10-year bonds over Germany’s fell one basis point to 3.033 percentage points.
Commodities
West Texas Intermediate crude decreased 1.6 per cent to US$68.26 a barrel, the lowest in six weeks. Gold advanced 1 per cent to US$1,234.08 an ounce, the highest in 14 weeks on the biggest gain in more than a week.
Source: BNN Bloomberg
https://www.bnnbloomberg.ca/stocks-under-pressure-as-global-risks-weigh-on-investors-1.1156540
