Stock futures fall with increasing bond yields

U.S. stock futures fell, driven by technology stock losses as investors shunned both government bonds and stocks over concerns that further interest rate hikes and China’s Covid-19 policy will affect growth.

Futures for the S&P 500 fell 2.1%, setting major indexes on another day of losses after opening in New York. Contracts related to the technology-focused Nasdaq-100 fell 2.7%, while contracts for the Dow Jones Industrial Average fell 1.7%.

Investors have largely withdrawn from stocks and bonds after the Federal Reserve approved a half percent increase in the reference loan rate last week. The move, part of the central bank’s efforts to curb rising inflation, has left money managers in suspense about how much the Fed could tighten further in its quest for price control.

This financial tightening has heightened fears of a slowdown in global growth. China’s implementation of quarantine and other measures to curb the spread of Covid-19 and Russia’s war against Ukraine has heightened concerns about supply chain disruptions and reduced consumer spending.

“The U.S. stock market is quite expensive, especially technology stocks, the market doesn’t know how high the Fed has to go to control inflation and we have a sense of global slowdown,” said Sebastien Galy, macro strategist at Nordea Asset Management. “There are a lot of negative things happening in the market.”

U.S. government bonds sold out again, pushing yields on the reference ten-year government bond to 3.179% on Monday from 3.124% on Friday. That set him at a new multi-year high. The ten-year yield rose 1.6 percentage points from the end of 2021 to Friday, prompting some investors to re-evaluate the valuation of technology and rising stocks. Bond yields rise when prices fall.

The Cboe volatility index – the so-called fear measure on Wall Street, also known as the VIX – rose to 34.28, on its way to the highest level of closure since March 8.

“Market fluctuations show that there is a great deal of uncertainty about where people think we are going,” said Peter Andersen, founder of Boston-based investment firm Andersen Capital Management.

The possibility of further raising interest rates to curb inflation has worried some investors that such measures will slow economic growth.

These fears have led some money managers to hold the dollar, which is considered a safer investment in times of volatility, due to its status as the world’s reserve currency. The WSJ Dollar index, which measures the U.S. currency against a basket of 16 others, rose 0.3 percent on Monday.

For commodities, futures prices for Brent crude fell 2.9% to $ 109.19 a barrel. Rising oil prices since the start of the Russian war against Ukraine have begun to decline as traders worry that blockades to curb the spread of Covida-19 in China will reduce global demand.

The price of bitcoin fell over the weekend and traded at $ 32,905.84 on Monday, down 8.8% from Friday’s level at 5pm Eastern Time. The popular cryptocurrency has lost more than a quarter of its value in the year to date.

Shares of cryptocurrency companies fell on pre-marketing Monday along with bitcoin. Shares of cryptocurrency exchange Coinbase Global fell 6.7%, while shares of Marathon Digital Holdings for bitcoin mining fell 7.6%.

Abroad, the pan-continental Stoxx Europe 600 fell 2.1%, led by a decline in basic resources and the travel and leisure sector.

In Asia, Japan’s Nikkei 225 fell 2.5% on Monday, while Australia’s S & P / ASX 200 fell 1.2%.

The woman walked past an electronic screen in Tokyo on Monday.


Photography:

Eugene Hoshiko / Associated Press

China’s CSI 300 index, which tracks the largest companies listed in Shanghai or Shenzhen, fell 0.8%. Markets in Hong Kong were closed due to a national holiday.

Write to Caitlin Ostroff at [email protected] and Serena Ng at [email protected]

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