European Stocks, US Equity Futures Extend Declines: Markets Wrap

(Bloomberg) — US equity futures slipped at the end of a week that saw a pullback in megacap technology stocks broaden into a wider selloff amid signs of a weakening economy.

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Contracts on the S&P 500 fell about 0.1% after almost every major group in the index fell on Thursday as the benchmark dropped nearly 1%. Earlier in the week, a wide array of companies soared in just a few days, outperforming the cohort of big techs. Europe’s stock benchmark fell for a fifth day, on track for the longest losing streak since October.

US initial jobless increased by the most since early May, data showed Thursday, a sign of cooling in the labor market that supports expectations the Federal Reserve will soon cut interest rates. But concerns about the health of the economy — and the potential impact of a second Donald Trump presidency upending markets — are now moving to the forefront.

“From a big-picture perspective, both the Fed moving towards a rate cut and Trump odds increasing should be risk positive,” said Mohit Kumar, a strategist at Jefferies International Ltd. “But it also meant that investors reconsider their asset and sector allocation as we head into the summer months. Sectors with heavier positioning suffered in the adjustment.”

There’s a risk of a setback for the equities this summer, according to Goldman Sachs Group Inc. strategists. The correction could result from “the combination of weaker growth data, already more dovish central bank expectations and rising policy uncertainty into the US elections,” according to strategists led by Christian Mueller-Glissmann.

Treasury yields dipped after 10-year yields rose four basis points to 4.20% Thursday. An index of the dollar held on to gains from the prior session.

Travel and leisure stocks and basic resources led a broad-based decline in Europe. Sartorius AG plunged more than 13% after the German electronics maker lowered its full-year guidance. Computer-games maker Ubisoft Entertainment SA fell more than 8% after a mixed release on full-year targets.

Meanwhile, technical…

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