Nasdaq-100 Drives US Equity Futures Lower as Bond Yields Rise and Evergrande Concerns Simmer


U.S. equity futures were showing losses on Friday, on the heels of two strong sessions, as bond yields continued to rise and investors watched struggling real estate giant China Evergrande ahead of the weekend.

How are stock index futures traded?
  • Dow Jones Industrial Average YM00 futures contracts,
    -0.35%
    fell almost 100 points, or 0.3%, to 34,550

  • S&P 500 ES00 Futures,
    -0.46%
    fell 16 points, or 0.4%, to 4,421

  • Nasdaq-100 NQ00 Futures Contracts,
    -0.58%
    fell 81 points, or 0.5%, to 15,223.

Thursday, the Dow Jones Industrial Average DJIA,
+1.48%
rose 507 points, or 1.48%, to 34,765, its biggest two-day point and percentage gain since March 8, 2021, according to Dow Jones data. The S&P 500 SPX,
+ 1.21%
rose 53 points, or 1.21%, to 4,449, and the Nasdaq Composite COMP,
+1.04%
gained 155 points, or 1.04%, to 15,052.

What drives the market?

Shares had enjoyed two days of solid gains after the Federal Reserve’s policy meeting on Wednesday, as markets appeared to welcome a delay in the start of the cut and ignored hawkish nuances in the central bank’s outlook. But a delayed tantrum appeared to be playing out for bonds on Thursday, as yields soared and remained elevated on Friday.

“Something has clearly changed and the positioning on rates is changing. US 10-year yields jumped to 1.44%, posting their biggest one-day gain since March, while 30-year bond yields jumped the most in a single day since March 2020, ”said Neil Wilson , chief market analyst for Markets.com. Thursday also saw several global central banks meet, with rate hikes in Norway and Turkey.

“Although the Fed and BoE remain fairly cautious and the dogma of transitory inflation persists, they are beginning to move beyond the emergency mode of the pandemic era. Investors are seeing it and moving too – rates are rising again like they did earlier this year, ”Wilson said.

The main indexes maintained weak weekly gains, in a week that had started with sharp losses linked to fears of global contagion from the unrest surrounding real estate group China Evergrande.

As of Thursday, bondholders still had not received money from China Evergrande 3333,
-11.61%,
who was due to make an interest payment of $ 83.5 million on dollar bonds, the Wall Street Journal reported, citing sources.

The company has a 30-day grace period to make a payment, but otherwise Evergrande could trigger a default. Those stocks fell 12% in Hong Kong on Friday. Elsewhere, media reported on Friday that the company’s electric vehicle unit had not paid suppliers for months, with employees also not receiving any wages for September.

Elsewhere, Friday’s data schedule is light with August new home sales forecast for 10 a.m. EST. At the same time, Federal Reserve Chairman Jerome Powell is scheduled to deliver opening remarks at the Fed Listens ‘Perspectives on Pandemic Recovery’ event, and Kansas City Fed Chairman, Esther George, will discuss the outlook for the economy and monetary policy at an American Enterprise Institute conference. .

Cleveland Fed President Loretta Mester will speak at the Ohio Bankers League conference at 8:45 a.m. EST.

Which companies are targeted?
  • Actions of Nike Inc.
    NKE,
    + 1.36%
    fell 4% in pre-market trading after the sportswear maker reported quarterly sales below Wall Street expectations, and said wages and overheads weighed on revenues.

  • Costco Wholesale Corp.
    COST,
    + 0.10%
    Shares rose slightly, with the retailer surpassing $ 60 billion in net sales for the first time in a single quarter, reaching $ 5 billion in annual profits and growing at its fastest pace in more than 20 years.
How are other assets traded?
  • The yield of the 10-year Treasury bill TMUBMUSD10Y,
    1.414%
    rose 2 basis points to 1.428%.

  • The ICE US Dollar DXY index,
    -0.31%,
    a measure of the currency against a basket of rivals, fell 0.3% to 93.15.

  • Oil futures were flat, with the US benchmark CL00,
    + 0.11%
    barely higher at $ 73.34 per barrel. GC00 gold futures contracts,
    + 0.26%
    rose 0.2% to $ 1,754 an ounce.

  • In Asia, the Hong Kong Hang Seng HSI index,
    -1.30%
    fell 1.3%, while the Chinese index CSI 300,000 300,
    -0.08%
    finished unchanged. The Nikkei 225 NIK index,
    + 2.06%
    jumped 2%.

  • In Europe, the Stoxx Europe 600 SXXP,
    -0.79%
    was ready to break with three consecutive days of gains, down 0.6%, while the FTSE 100 UKX index,
    -0.39%
    slipped 0.2%.

About Rodney Fletcher

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