US stock futures stumbled on Monday as China COVID fears sparked fresh global growth concerns.
How are stock-index futures trading
Futures on the Dow Jones Industrial Average YM00
fell 180 points, or 0.6%, to 31,130.
S&P 500 futures ES00
dropped 26.75 points, or 0.7%, to 3,874.50.
Nasdaq-100 futures NQ00
eased 92.25 points, or 0.8%, to 12,059.75.
Major stock indexes rose last week, with the S&P 500 SPX
rising 1.9%, the Dow Jones Industrial Average DJIA
up 0.8% and the Nasdaq Composite Comp
What’s driving markets
Investors started the week in a downbeat mood as a fresh flare-up of COVID-19 concerns in China added to the angst about prospects for the global economy.
Beijing imposed stringent restrictions across a number of cities this weekend in an effort to tackle the emergence of the highly contagious BA.5 Omicron sub-variant. China makes up more than a quarter of global manufacturing and any shutdown can hobble the world-wide supply chain, potentially causing further price spikes. The Shanghai Composite CN: SHCOMP
The fall in US equity index futures came after a 3% rebound for the S% P 500 last week when traders reasoned that the market’s recent drop to an 18-month low meant fears about inflation and slowing growth were factored in. A better-than-expected US labor report, which showed a net 372,000 jobs added in June, also supported sentiment.
The US second-quarter earnings season kicks into gear on Thursday, with JPMorgan JPM
leading the way for the banking sector. Investors will now be eager to see just how much rising prices have impacted corporate profitability.
“This is a very important season (aren’t they all) as the collapse in equities so far in 2022 is largely due to margin compression and not really earnings weakness,” said analysts at Deutsche Bank.
As of Friday, companies in the S&P 500 index were expected to report year-over-year earnings growth of 5.7% for the second quarter, according to IBES data from Refinitiv, which would be the slowest since the fourth quarter of 2020 during the pandemic. . The expectations are skewed, however, by expectations for year-over-year growth of 239.1% for the energy sector. Excluding energy, earnings are expected to contract by 3%, the data show. Full-year earnings are expected to see a rise of 9.4% but 3.8% excluding energy.
Read: Will earnings season trigger another leg lower for the Dow? Investors hunt for recession clues
Stephen Innes, managing partner at SPI Asset Management, said that the market will be focused on company guidance for coming quarters, and the post-earnings reactions will dictate the broader market risk appetite.
“While bears still see 10-15% more S&P 500 downside, increasing sympathy for a bull case is emerging (or at least a bear squeeze). We are already amid a shallow slowdown, which may be the best-case scenario for risk, ”he said.
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Companies in focus
- Twitter Inc. TWTR shares lost 7% in premarket action after Elon Musk said he was withdrawing his bid. The company said it would try to enforce the $ 44 billion buyout.
Shares of casino operators with operations in Macau were under pressure Monday after Macau city officials said casinos there would be shut down for a week to fight a COVID-19 surge. Shares of Wynn Resorts Ltd.
dropped 5.7%, Las Vegas Sands Corp.
slumped 5.3% and Melco Resorts & Entertainment Ltd.
shed 4.6%. Wynn and Las Vegas Sands had more revenue from Macau than Las Vegas in 2021.
A report released on Sunday said Uber Technologies Inc.
lobbied political leaders to relax labor and taxi laws, used a “kill switch” to thwart regulators and law enforcement, and channeled money through Bermuda and other tax havens and considered portraying violence against its drivers as a way to gain public sympathy, as the company. aggressively pushed into global markets. In a statement, Uber acknowledged “mistakes” in the past and said CEO Dara Khosrowshahi, hired in 2017, had been “tasked with transforming every aspect of how Uber operates. Uber shares fell 2%.
said Monday that a bivalent COVID-19 booster that equally protects against BA.1 and the original strain of the virus produced a better antibody response against the BA.4 and BA.5 subvariants in people who were fully vaccinated and boosted than its currently authorized COVID-19 booster.
The Hang Seng HK: HSI
in Hong Kong slumped 2.9% after China imposed big fines on Tencent HK: 700
and Alibaba HK: 9988
for not complying with disclosure rules. Japan’s Nikkei 225 JP: NIK
bucked the regional trend, adding 1.1% after the country’s ruling coalition expanded its majority in upper house elections.
Waning risk appetite helped push investors into Treasurys, nudging 10-year bond yields BX: TMUBMUSD10Y
down 4 basis points to 3.060%, and boosted the dollar. The DXY DXY
index rose 0.5% to 107.53 to flirt with 19-year highs.
WTI crude CL
fell 2.6% to 102.05 a barrel as economic slowdown worries reverberated.
dipped 0.5% to $ 1733 an ounce and Bitcoin BTCUSD
slid 3.7% to 20,484.