Dow Futures Tumble, Bond Yields Slide as Growth Concerns Mount

The Thursday market minute

• Global stocks slide as growth concerns trump inflation fears amid sustained spike in delta variant coronavirus infections.
• Fed minutes suggest that the US recovery remains patchy, with downside risks, suggesting that bond market support will remain until the end of the year.
• Chinese lawmakers point to rate cuts in the world’s second largest economy as domestic demand slows and infections fuel tame regional trade.
• Oil prices plummet as demand concerns offset OPEC’s uncertainty over the Department of Energy’s data on crude oil inventories this morning.
• The benchmark yield for 10-year government bonds in overnight trading is at a 5-month low of 1.25%, while the dollar index slipped 0.14% from its 3-month high to 92.517.
• US stock futures point to a much weaker opening on Wall Street after weekly jobless claims saw a modest rise in weekly jobless claims to 373,000 through July 3.

Wall Street futures slumped Thursday as benchmark government bond yields fell to five-month lows as investors put the brakes on from last night’s record high amid mounting concerns about the strength of the post-pandemic recovery stepped.

Minutes of the last meeting of the Federal Reserve, which ended on June 16, showed that Chairman Jerome Powell and colleagues believed that the benchmark for “significant further progress” in job growth and inflation was not yet reached, and the central bank therefore likely the pace of monthly bond purchases of $ 120 billion would continue through the end of the year.

That sentiment shook investors, who were already looking at key manufacturing and service sector data releases suggesting that labor and resource shortages were holding back growth in major global economies.

Legislative advice in China yesterday of short-term rate cuts heightened concerns as it suggested the world’s second largest economy could suffer from both domestic demand pressures and the slowdown in trade likely to be driven by the current wave of the delta. Variant coronavirus infections are seen around the world to follow.

So oil prices are falling for the second year in a row due to demand issues despite OPEC members sticking to the remnants of their agreement to cut production, and benchmark yields on 10-year government bonds drop to a five-month low of 1.25% in overnight trading , stocks are experiencing their biggest pullback since early May.

Futures contracts pegged to the Dow Jones Industrial Average suggest a 450 point drop in the opening bell, while those pegged to the S&P 500 are valued at a 56 point drop at the start of trading.

However, the decline in yields on government bonds, which typically support tech stocks, was undetectable on Thursday as futures pegged to the Nasdaq Composite are valued for an opening bell break of 215 points.

Tech stocks were also affected by 37 attorneys general’s decision last night to file an antitrust lawsuit against Google parent Alphabet (GoogL) – Get the report claims it used restrictive developer contracts to maintain a monopoly on its Google Play app store.

Google shares were marked 1.66% lower in pre-market trading at USD 2,487.50 each.

On the overseas markets, European equities fell sharply during the trading hours in Frankfurt, with the trading-sensitive DAX performance index expected to rise by 1.3 ahead of today’s political announcement by the European Central Bank at 7.45 a.m. Eastern Time, during which President Christine Lagarde is expected % lost to submit a new inflation target of 2%, which includes a sustained period of higher prices.

In Asia, regional stocks plummeted to two-month lows, with the MSCI ex-Japan index down 1.6% as growth concerns in China were offset by continued crackdown on tech companies by officials in Beijing.

In Tokyo, where lawmakers declared another COVID state of emergency just two weeks before the Olympic Games began, stocks fell for the second year in a row on the Nikkei 225 at 28,118.03 points.

source https://thedailytradingnews.com/dow-futures-tumble-bond-yields-slide-as-growth-concerns-mount/