Stock Futures Sharply Lower After Dow Logs Third Losing Week
Stock futures take a sharp turn lower as China’s Evergrande crisis deepens. Dow futures lower by 400 points after the third week in losses.
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- Stock futures drop sharply, Dow futures lower by more than 400 points
- China’s Evergrande meltdown poses risks for the stability of the global market
Stock Futures Dive as Evergrande Lingers on the Brink of Collapse
US stock index futures dropped sharply in pre-market trading on Monday after the Dow Jones Industrial Average registered its third week of losses in a row, the first such stretch since September 2020.
Futures contracts on the blue-chip Dow shed more than 400 points, or 1.2%, ahead of regular trading today. S&P futures were lower by roughly 1%, while Nasdaq futures ticked lower by 0.7%.
The negative implied open today came after increased uncertainties from Asia threatened to spill over other financial markets. Hong Kong stocks endured a massive selloff during the Monday session. The benchmark Hang Seng index nosedived over 4% as fears that the Evergrande crisis could drag down other property stocks.
Evergrande, a Chinese property giant, has accumulated a debt of over $300bn following years of rapid expansion. Now the embattled developer has warned it could default on its crushing debts. Analysts point that the giant’s potential failure could have devastating consequences not only over the Chinese economy but other markets in other continents, too.
US Equities Struggle in September
As US traders and investors prepare to enter the first trading day of the week, they remain cautious that the recent full-steam-ahead rally could have already seen its best days, at least for this cycle. Over the last three weeks, the blue-chip Dow Jones Industrial Average has not been able to close in positive territory.
Last week stocks struggled and turned lower for the week on Friday. The Dow closed Friday’s market session lower by half a percent, logging its third straight week with a loss. The S&P500 and the Nasdaq Composite shed 0.9% each as the downturn was broad-based.
The month of September, so far, has not been in favor of the risky assets. All three major stock gauges are in negative territory for the month but still float less than 3% from their all-time highs set earlier.
European Shares Plunge More than 1.5%
In Europe, stocks opened sharply in the red on Monday after investors have decided to take a risk-off stance today. The degree of red among European bourses exceeded 1.5% in the initial moments of the session. The continued selling today extended the gloomy sentiment from last week when the region-wide Stoxx 600 closed Friday’s trading down 0.9%.
Later in the week, traders and investors will be looking toward the meeting of the US Federal Reserve. The main theme of the discussion will be about tapering the asset purchase program. Fed officials are expected to present clues over the timeline of reducing the $120bn in monthly bond-buying.
The two-day meeting will conclude with a press conference hosted by Fed Chairman Jerome Powell on Wednesday.
US Dollar Rises, Bitcoin Slips
In currencies today, the US dollar has advanced against its counterparts on the currency board. The EUR/USD has declined as short-sellers are pushing the pair to a three-week low near 1.1700. Below that, bears could aim to reach a multi-month low at 1.1600, a level last seen in October 2020.
Bitcoin’s price is pressured on Monday, similar to other assets in the broad market. The price of the leading cryptocurrency reached a low of almost $45,000 earlier today.