(Bloomberg) — U.S. equity futures fell Friday along with stocks in Asia as a rotation away from high-flying tech stocks gained steam amid question marks over the sustainability of lofty valuations. European stock futures ticked up.
Losses in Tokyo, Shanghai and Hong Kong were smaller than those seen in the U.S. overnight, as trader focus turned to the non-farm payrolls report later Friday. S&P 500 futures slipped after the benchmark fell 3.5% Thursday. Nasdaq contracts slid over 1% after the tech-heavy gauge’s 5% overnight slump, its largest since March. That suggests the U.S. retreat could extend for a second day ahead of a holiday weekend there. Treasuries and the dollar were steady, with moves into haven assets muted despite the pronounced drop in equities. Gold ticked higher.
Global equities are pulling back from all-time highs just as the strong recent run up showed signs of broadening into other sectors. While data Thursday showed applications for jobless claims fell last week, U.S. investors may need evidence of a fuller economic recovery after a 60% run-up in the S&P 500 since its March lows. Meanwhile, investors are monitoring progress on a vaccine for the pandemic and continued signals of support from central banks and government to support the economy.
“Given the market’s seemingly relentless climb higher on the back of the mega-cap tech names, it should be no surprise that a pullback was in the offing as the market became increasingly extended and overbought,” said Quincy Krosby, chief market strategist at Prudential Financial Inc. This could be “an overbought market that is burning off froth, following end-of-the-month portfolio adjustments as managers needed to catch up.”
Elsewhere, oil declined. The Cboe Volatility Index — a measure of expected price swings for the S&P 500 Index known as Wall Street’s “fear gauge” — rose to the highest level since June. Emerging markets shares headed for their worst week in four months.
Here are some key events coming up:
U.S. jobs report Friday is forecast to show payrolls continued to rebound in August from virus lows.
Here are the main market moves:
Stocks
S&P 500 futures slipped 0.3% and Nasdaq 100 contracts were 0.9% lower as of 6:55 a.m. in London. The S&P 500 sank 3.5% and the Nasdaq Composite lost 5% on Thursday.Japan’s Topix index declined 0.9%.Hong Kong’s Hang Seng fell 1.5%.Shanghai Composite dropped 1.2%.South Korea’s Kospi index retreated 1.2%.Australia’s S&P/ASX 200 Index fell 3%.Euro Stoxx 50 futures rose 0.2%.
Currencies
The Bloomberg Dollar Spot Index was little changed.The euro was flat at $1.1850.The yen was at 106.16 per dollar, little changed.The offshore yuan traded at 6.8441 per dollar, little changed.
Bonds
The yield on 10-year Treasuries was flat at 0.64%.Australia’s 10-year yield dropped two basis points to 0.89%.
Commodities
West Texas Intermediate crude declined 0.9% to about $41 a barrel.Gold was at $1,933.75 an ounce, up 0.2%.
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