(Bloomberg) — U.S. index futures dropped, surrendering earlier gains, as investors assessed whether global growth can withstand a slowdown in China and a global energy crunch.
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Contracts on the S&P 500 Index slipped 0.3% after rising as much as 0.6%, while Nasdaq 100 futures fell 0.8%. Treasury yields advanced as traders braced for speeches by Federal Reserve policy makers this week. The euro slipped as Germany looked set for months of complex coalition talks. Blank-check company Gores Guggenheim Inc. climbed in premarket trading after electric-vehicle maker Polestar agreed to merge with it.
Even as China Evergrande’s debt crisis festers, data due this week may show a manufacturing recovery in the world’s second-largest economy is faltering. A developing energy crisis threatens to crimp global growth further at a time markets are preparing for a tapering of Fed stimulus. The week could see volatile moves as traders scrutinize central bankers’ speeches, including Chair Jerome Powell’s meetings with Congressional panels.
“Most bad news comes from China these days,” Ipek Ozkardeskaya, a senior analyst at Swissquote Group Holdings, wrote in a note. “The Evergrande debt crisis, the Chinese energy crackdown on missed targets and the ban on cryptocurrencies have been shaking the markets, along with the Fed’s more hawkish policy stance last week.”
The euro slipped against the dollar as the German election failed to produce a clear winner, raising concerns of a prolonged decision on the leadership of Europe’s biggest economy.
European stocks erased their gains, tracking U.S. futures. Rolls-Royce jumped to the highest since June 2020 after the company was selected to provide the powerplant for the B-52 Stratofortress under the Commercial Engine Replacement Program.
The 10-year Treasury yield added four basis points to 1.49%, the highest since June 29. On Tuesday, Powell will join Treasury Secretary Janet Yellen in addressing the “CARES Act Oversight of the Treasury and Federal Reserve” and on Thursday, the two appear before the House Financial Services Committee for a hearing on their pandemic response.
Tightening oil supplies sent West Texas Intermediate crude above $75 per barrel.
Gores Guggenheim rose 2.6% in early New York trading. Polestar, the electric-carmaker controlled by Volvo Car AB and its owner Zhejiang Geely Holding Group Co., has agreed to go public through a merger with Gores, at an enterprise value of $20 billion.
Here are some events to watch this week:
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Fed Chairman Jerome Powell, Treasury Secretary Yellen to testify at a Senate Banking Committee hearing Tuesday
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European Central Bank President Christine Lagarde speaks Tuesday
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Japan’s ruling party votes to elect leader, Wednesday
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Central bank chiefs Andrew Bailey (BOE), Haruhiko Kuroda (BOJ), Christine Lagarde (ECB) and Jerome Powell (Fed) participate in an ECB Forum panel, Wednesday
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House Financial Services Committee hearing on the Fed, Treasury’s pandemic response, Thursday
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China Caixin manufacturing PMI, non-manufacturing PMI, Thursday
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U.S. manufacturing PMI, Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
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Futures on the S&P 500 fell 0.3% as of 8:24 a.m. New York time
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Futures on the Nasdaq 100 fell 0.8%
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Futures on the Dow Jones Industrial Average were little changed
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The Stoxx Europe 600 fell 0.2%
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The MSCI World index was little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro fell 0.2% to $1.1700
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The British pound rose 0.1% to $1.3699
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The Japanese yen fell 0.2% to 110.96 per dollar
Bonds
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The yield on 10-year Treasuries advanced five basis points to 1.50%
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Germany’s 10-year yield advanced three basis points to -0.20%
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Britain’s 10-year yield advanced four basis points to 0.97%
Commodities
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