Jan 08, 2024 11:50 AM EST
Monday saw a little decline in US stock futures but Treasuries remained stable as traders adjusted their wagers following last week's selloff. A barrel of Brent oil dropped below $77.
S&P 500 contracts fell 0.2%, while Boeing saw a nearly 10% loss after a 737 Max 9 aircraft's fuselage portion ejected during a weekend trip. The panel's installer, Spirit AeroSystems Holdings Inc., saw a 21% decline.
Due to the ongoing market weakness, Saudi Arabia lowered official selling prices for all areas, which caused oil prices to fall by over 3%. Stocks in Europe fell behind those in Asia.
After a week of conflicting US economic data, markets are seeking direction, which has led to the worst fall in global shares since October. Uncertainties were exacerbated by rumors that the Federal Reserve would not rush interest rate cuts. More clues to the market might come from the US inflation data that is due on Thursday and the start of the earnings season on Friday, which will include big US banks like Citigroup Inc. and JPMorgan Chase & Co.
Calvin Tse and Sam Lynton-Brown, two analysts at BNP Paribas, noted in a report that multiples are now priced at high levels. They expressed worries about the possibility of full-year earnings letdown and high odds of it, but they also pointed out that there are now more downside risks than upside opportunities.
The consensus prediction among sell-side analysts, as per the most recent Markets Live Pulse survey from Bloomberg, is that S&P 500 earnings will hit all-time highs this year; nevertheless, such projections are too optimistic. According to the study, the biggest danger to the bottom lines this year is an economic downturn.
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According to data released on Monday, manufacturing orders in Germany increased far less in November than was predicted, which is concerning for the continent's largest economy.
US Treasury yields decreased by one basis point to 4.04%. The recent retreat hasn't deterred some traders, who see it as an opportunity to take advantage of high returns before the Federal Reserve begins to reduce rates.
The phenomenon was evident on Friday, when bond prices declined subsequent to the Labor Department's announcement that employment growth had unexpectedly increased in the previous month. However, when buyers pounced, 10-year Treasury rates approached 4.1%, the highest level since mid-December, and the selloff was restrained.
The sell-off in technology equities was the main cause of the 2.3% decline in the Hang Seng China Enterprises Index in Asia. In a client note, experts from Nomura Group, including Chetan Seth in Singapore, stated that sentiment in China is still fairly negative. They stated, "Equity investors still do not appear convinced, despite more signs of support for the economy."
Brent also stopped rising last week following the Saudi price reductions. The cuts overshadowed worries over Red Sea hostilities and supply interruptions in Libya, highlighting a deteriorating global picture notwithstanding robust global supply, notably from the US.
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