Overview of US premarket trade on August 18, 2023. Stock indices continue to extend their decline
August 18, 2023 12:23 pm
US stock index futures opened lower on Friday as they continue to extend a big sell-off from the previous day. A decline is further fueled by concerns over the Federal Reserve’s potential policy tightening and China’s structural challenges. Futures for the S&P 500 decreased by 0.3%, while the tech-heavy NASDAQ dropped by 0.5%. Currently, US indices are recording their most significant losses since March this year, mirroring trends in European markets. The European Stoxx 600 index has depreciated by 1.0%, just like its Asian counterparts.
The bond market sees a slowdown in the rise of yields. The yield on the 10-year Treasury notes has fallen by five basis points, retreating from its 2007 highs. Bonds in the UK and Germany also saw gains, with their yields contracting. Despite today’s reduction in the yield, investors remain wary of entrenched inflation risks and the recent sharp uptick in interest rates. China’s real estate crisis, combined with shadow banking system issues, has further agitated market anxiety, raising questions about potential side effects.
Adding to the market’s jitters, the Cboe Volatility Index has surged to 18, its highest level since May. Analysts at Bank of America Corp. have warned that stocks could face an additional 4% drop, given the economic turbulence in China and the yield spike on bonds. The expiration of options worth about $2.2 trillion today has also captured traders’ attention.
Surprisingly, a slowdown in the prices of risk assets was triggered by the recent publication of the latest Fed minutes. The document indicated that Fed officials are contemplating tightening monetary policy. This revelation has dashed hopes of the central bank halting its rate hikes this year. Now, all eyes are on the upcoming speech by the Fed Chairman at Jackson Hole next week, which will provide insights into the Federal Reserve’s intentions.
In other market news, Bitcoin has plummeted and is currently trading around $26,000 following reports that Elon Musk’s SpaceX has sold its Bitcoin holdings worth $373 million.
As for the technical outlook for the S&P 500, the demand for the index remains subdued. Buyers are unlikely to develop a proper correction. They need to seize control over the level of $4,382 to be able to push the price further to $4,405. Another goal for the bulls will be to assert their strength at $4,427. If so, they will cancel the bearish market. If the price continues to slide amid persistent risk aversion, buyers will have to do their best to protect the level of $4,357. Its breakout will quickly push the instrument back to $4,332 and will pave the way to the target of $4,290.
The material has been provided by InstaForex Company – www.instaforex.com
US stock index futures opened lower on Friday as they continue to extend a big sell-off from the previous day. A decline is further fueled by concerns over the Federal Reserve’s potential policy tightening and China’s structural challenges. Futures for the S&P 500 decreased by 0.3%, while the tech-heavy NASDAQ dropped by 0.5%. Currently, US indices are recording their most significant losses since March this year, mirroring trends in European markets. The European Stoxx 600 index has depreciated by 1.0%, just like its Asian counterparts.
The bond market sees a slowdown in the rise of yields. The yield on the 10-year Treasury notes has fallen by five basis points, retreating from its 2007 highs. Bonds in the UK and Germany also saw gains, with their yields contracting. Despite today’s reduction in the yield, investors remain wary of entrenched inflation risks and the recent sharp uptick in interest rates. China’s real estate crisis, combined with shadow banking system issues, has further agitated market anxiety, raising questions about potential side effects.
Adding to the market’s jitters, the Cboe Volatility Index has surged to 18, its highest level since May. Analysts at Bank of America Corp. have warned that stocks could face an additional 4% drop, given the economic turbulence in China and the yield spike on bonds. The expiration of options worth about $2.2 trillion today has also captured traders’ attention.
Surprisingly, a slowdown in the prices of risk assets was triggered by the recent publication of the latest Fed minutes. The document indicated that Fed officials are contemplating tightening monetary policy. This revelation has dashed hopes of the central bank halting its rate hikes this year. Now, all eyes are on the upcoming speech by the Fed Chairman at Jackson Hole next week, which will provide insights into the Federal Reserve’s intentions.
In other market news, Bitcoin has plummeted and is currently trading around $26,000 following reports that Elon Musk’s SpaceX has sold its Bitcoin holdings worth $373 million.
As for the technical outlook for the S&P 500, the demand for the index remains subdued. Buyers are unlikely to develop a proper correction. They need to seize control over the level of $4,382 to be able to push the price further to $4,405. Another goal for the bulls will be to assert their strength at $4,427. If so, they will cancel the bearish market. If the price continues to slide amid persistent risk aversion, buyers will have to do their best to protect the level of $4,357. Its breakout will quickly push the instrument back to $4,332 and will pave the way to the target of $4,290.
The material has been provided by InstaForex Company – www.instaforex.com
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