(Bloomberg) — U.S. futures and European stocks followed a fall in Asian stocks after weak service industry data in China sparked new worries about the outlook for the global economy.
The S&P 500 and Nasdaq 100 contracts both fell about 0.5%, suggesting U.S. stocks may start cheap when trading resumes after the Independence Day holiday. United Parcel Service Inc fell in premarket trading as workers neared a payroll strike. Monster Beverage rose more than 2% ahead of Thursday’s earnings report.
Yields on policy-sensitive two-year bonds fell about three basis points to 4.91%, while 10-year yields hovered around 3.86%. Dollar indicators edged higher.
The latest evidence of slowing economic growth around the world is drying up demand for stocks after a spectacular first-half rally mainly by mega-cap tech stocks. Major central banks such as the US Federal Reserve and the European Central Bank are still in tightening mode, putting the brakes on economic growth.
“It’s too early to say how deep the upcoming recession will be, but clearly a slowdown is coming,” Fabiana Federi, chief investment officer for equities and multi-assets at M&G, told Bloomberg Television. rice field. “It’s too early to give up on risky assets, be it equities or credit, but at the same time we need to hold a pretty high position on the quality pole,” she said.
The Stoxx Europe 600 index fell about 0.6%, led by miners on concerns about weakening demand for minerals from China. The Composite Purchasing Managers Index for the common currency area fell further after it was revised downwards. Casino Guichard Pération SA fell by as much as 42% as investors quoted competing offers to bail out a struggling French grocery store. European government bonds rose, with German 10-year bond yields dropping four basis points to 2.41%.
With the Fed and ECB expecting further rate hikes in July, a Bloomberg Economics-calculated measure of total borrowing costs rose to 6.25% this quarter, up from a forecast of 6% three months ago. It is shown that the peak has been reached. Later Wednesday, traders will monitor the minutes of the Fed’s last policy meeting, which embarrassed Wall Street as officials paused the cycle of 10 straight rate hikes, with two more rate hikes coming this year. I expect.
An initial decline in Chinese stocks was amplified as the Caixin China Services Purchasing Managers Index was lower than expected, while the offshore yuan reversed its gains. It is also worth noting that the yuan’s depreciation has fallen even though the People’s Bank of China (PBOC) has so far maintained its support for the yuan in its daily decisions.
“This puts a renewed focus on slowing growth momentum and recent heightened geopolitical uncertainty,” said Chal Chanana, market strategist at Saxo Capital Markets, of China’s services data.
Less optimism about China’s outlook is also driving investors to lower their expectations for Asian stocks this year. A Bloomberg News survey of 17 strategists and fund managers showed that the MSCI Asia-Pacific index could rise only about 5% from Tuesday’s closing level by the end of the year.
Elsewhere, Brent crude was firm after rising on Tuesday after Saudi Arabia and Russia cut output. Traders are awaiting potentially critical comments from the Saudi energy minister. Gold remained largely unchanged.
This week’s main events:
OPEC International Seminar, Speakers Including OPEC+ Oil Ministers Open Wednesday in Vienna
FOMC to publish minutes of June policy meeting on Wednesday
New York Fed President John Williams gives a “fireside chat” at the Central Banking Research Association meeting Wednesday at the New York Fed.
U.S. Initial Jobless Claims, Trade, ISM Services, Jobs, Thursday
Dallas Fed President Laurie Logan to Address Panel on Central Bank Policy Challenges at CEBRA Meeting on Thursday
US unemployment, nonfarm payrolls, Friday
ECB’s Christine Lagarde to speak at event in France on Friday
The major movements in today’s market are:
As of 7:32 a.m. New York time, S&P 500 futures were down 0.4%.
Nasdaq 100 futures down 0.5%
Dow Jones Industrial Average futures down 0.4%
Stoxx European 600 down 0.6%
MSCI World Index down 0.2%
Bloomberg Dollar Spot Index gains 0.1%
The euro was little changed at $1.0881.
The British pound fell 0.2% to $1.2690.
The Japanese yen is almost unchanged at 1 dollar = 144.48 yen.
Bitcoin dropped 1.3% to $30,415.85.
Ether fell 1.5% to $1,913.06.
The 10-year government bond yield remained almost unchanged at 3.86%.
German 10-Year Bond Yield Barely Changed at 2.44%
UK 10-year bond yields rose two basis points to 4.44%.
West Texas Intermediate crude rises 2% to $71.18 a barrel
Gold futures rose 0.2% to $1,934.20 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With contributions from Richard Henderson, Allegra Catelli, and Tassia Sipahutar.
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