Friday August 20th

20-08-2021

S&P 500 futures are lower as markets get set to close out a losing week

U.S. stock index futures inched lower on Friday as the markets close out a losing week driven by fears of the Federal Reserve pulling back its stimulus. Futures on the broad index shed 0.2%. Dow Jones Industrial Average futures dropped 70 points, or 0.2%. Nasdaq 100 futures traded up 0.1%. All three major stock indexes are on track to close the week lower. The S&P 500 and the Dow are both on track to post their worst weekly performances since June, while the Nasdaq Composite is set to see its worst week since May. The S&P 500 is down 1.4% for the week through Thursday, while the Dow is off 1.75% and the Nasdaq Composite is 1.9%. lower. Minutes from the Fed’s July meeting released this week showed the central bank is willing to start reducing its monthly asset purchases this year. Investors sold equities and commodities this week and bought bonds on fears the move by the Fed may upend a global economy already under stress by the delta variant. This week, WTI crude oil has tumbled roughly 9% and copper has lost more than 7% on the fears, taking energy and materials stocks with them. The 10-year Treasury yield was at 1.232% on Friday morning, down from 1.78% in late March. “With Fed tapering coming while delta variant keeps spreading, the transition away from liquidity/policy regime to more mid-cycle markets means we may experience a bumpier ride ahead,” Barclays equity strategists said in a note. “Market narrative may thus turn more cautious, as concerns about peaking growth rates, Delta variant and policy mistake may prove headwinds, at a time where seasonality and technicals are unfavourable.” Tesla shares were higher in premarket after Elon Musk’s electric car maker had an AI day, where it unveiled a new custom chip and plans to build a humanoid robot. Tesla shares are off 6% this week as investors worry about slowing growth in one of its key markets China. The S&P 500 snapped a two-day losing streak in Thursday’s regular trading session while the Dow ended its third-straight day in red. After volatile trading, the S&P 500 closed 0.1% higher. The Nasdaq Composite added 0.1%. The Dow bucked the trend and shed 66.57 points. “Against a backdrop of thin liquidity as investors take summer vacations, minor stock market corrections are to be expected in a market that is pricing in peak earnings, extended price-to-earnings ratios and elevated economic growth expectations,” Richard Saperstein, chief investment officer at Treasury Partners, said. Shares in Asia-Pacific fell on Friday as China left its benchmark lending rate unchanged. Hong Kong’s Hang Seng index plunged 1.84% to close at 24,849.72, with Friday’s losses leaving the index more than 20% lower from its mid-February high. The Hang Seng Tech index shed 2.46% to 5,895.06. Mainland Chinese stocks also closed lower as the Shanghai composite declined 1.1% to 3,427.33 and the Shenzhen component slipped 1.614% to 14,253.53. The Nikkei 225 in Japan fell 0.98% to close at 27,013.25 while the Topix index shed 0.87% to end the trading day at 1,880.68. Elsewhere, South Korea’s Kospi declined 1.2%. Oil prices were down for a seventh straight session on Friday near three-month lows and heading for a weekly loss of over 6% as new lockdowns in countries facing surging cases of the COVID-19 Delta variant dampened the outlook for fuel demand. Brent crude futures fell 47 cents or 0.7% to $66.04 a barrel, near their lowest since May and down over 6% for the week. U.S. West Texas Intermediate (WTI) crude futures for September, due to expire on Friday, fell 52 cents or 0.8% to $63.17 a barrel and were down over 7% for the week. Gold prices were flat on Friday, as a firmer dollar eclipsed support from rising anxiety over increasing cases of coronavirus’ Delta variant that could delay economic recovery. Spot gold was flat at $1,780.43 per ounce by 0056 GMT, while U.S. gold futures was little changed at $1,782.40.