Morning Futures Briefing

As Traders Consider Global Rate Moves, New UK Economic Plan, Futures Sink

Stock futures slid in the U.S. and European markets tumbled early Friday as a new U.K. economic plan shook markets still trying to navigate an accelerating global rate environment.

Early Friday, the U.K. announced its biggest tax cuts since 1972 in anticipation of a likely recession. It was the latest broadside to markets after a week of central bank rate increases spotlighted by the Federal Reserve’s latest 75-basis-point increase on Wednesday.

Also, equity futures weren’t exactly cheered by an early announcement today by Goldman Sachs (GS) slashing its year-end target for the S&P 500® index (SPX) to 3,600 from 4,300. The global banking firm lowered its forecast on expectations for future Fed rate hikes trying to bring 40-year-high inflation under control. GS said it sees a “hard landing” ahead.

In the bond market, 10-year Treasuries (TNX) closed yesterday at 3.708%—up from 2.5% only a month ago—while the 30-year finished yesterday at 3.639%.  

Stock futures were fighting their way down with the Dow Jones (-1.09%), S&P 500 (-1.19%), Nasdaq 100 (-1.20%) and the Russell 2000 (-2.26%).

WTI crude oil slid (-2.81%) this morning to $81.13, well below a major support level of $84.

In Europe, the Stoxx 600 was down 2.8% in early afternoon trading Friday with Britain’s FTSE down (1.80%), the DAX (-2.22%), and the CAC (-1.96%).

Following Britain’s economic news, the pound dove below $1.11 for the first time since 1985, sliding 2% in addition to declines earlier in the week. 

Eurozone PMI fell to 48.2 in September from 48.9 in August, the third consecutive month of contraction in the private sector and the lowest reading since May of 2013.

Meanwhile German bond yields crossed 2% for the first time since 2011. Europe is contracting fast, and money currently is flowing to the stronger economies that have higher rates.

In Asia, all major indexes were in the red with the Shanghai (-0.66%), the Nikkei (-0.58%) and the Hang Seng (-1.18%) lower. After the close, Hong Kong announced that it would scrap its COVID-19 hotel quarantine rules.

Later today, we’ll see the S&P Global Manufacturing and Services PMI numbers in addition to the Baker Hughes rig count for September that should offer production clues. And to end Friday on a somewhat suspenseful note, Fed Chairman Jerome Powell has a scheduled public speech today.

 

 

 

 

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