(Bloomberg) — U.S. equity futures fell and stocks were mixed Tuesday as investors weighed concerns about tightening monetary policy and geopolitical tension against positive earnings reports.
Contracts on the S&P 500 and the Nasdaq 100 trimmed earlier losses, with International Business Machines Corp. rising in premarket trading after posting its best sales growth in 10 years. European equities rebounded from their worst drop since June 2020, buoyed by a profit beat by telecom firm Ericsson AB. Asian shares slid as Japan’s Topix entered a correction and China’s CSI 300 neared a bear market.
The Cboe Volatility Index, known as the VIX, rose for a sixth session on Tuesday, after briefly jumping intraday to the highest since October 2020 on Monday. The yield on 10-year Treasuries rose, while the dollar ticked up.
Volatility is hitting markets ahead of a key Federal Reserve meeting Wednesday, with U.S.-Russia tension over Ukraine also buffeting sentiment. Global equities at one point wiped almost $3 trillion on Monday, with the S&P 500 down more than 10% from a record high, before a dramatic reversal saw major U.S. benchmarks end in the green.
Elsewhere too, rate-hike worries were in focus. In Australia, bonds slid after stronger-than-expected inflation data, while Singapore’s dollar strengthened after surprise monetary-policy tightening in the country.
“Volatility is back,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said on Bloomberg Television. “We’re having a sea-change in terms of Fed policy. Equity investors frankly have been behind the curve in anticipating what’s coming, so there’s a lot of catch-up to do.”
Global shares are enduring their worst month since the pandemic roiled markets. The question facing investors is whether the slide is a buying opportunity or portends wider stress across more asset classes.
Strategists Predict Trouble for U.S. Stocks After Massive U-Turn
Russia Tension
In the latest development over Ukraine, where Russian troops are massing on the nation’s borders, the U.S. is putting as many as 8,500 troops on heightened alert for deployment to bolster NATO forces in Eastern Europe if needed. Russia has denied it intends to invade.
The market “is obviously getting a little bit jittery about what could happen, whether a military altercation might happen, and what it means for” U.S. sanctions on Russia, Lale Akoner, senior market strategist at BNY Mellon Investment Management, said on Bloomberg Television. She expects the tension to be resolved through a deal rather than conflict.
Elsewhere, oil rebounded after its biggest one-day slump this year. Bitcoin resumed its retreat amid weakness across a range of cryptocurrencies.
NVidia Corp. fell as people familiar with the matter said it’s quietly preparing to abandon its purchase of Arm Ltd. from SoftBank Group Corp. after making little to no progress in winning approval for the $40 billion chip deal.
For more market analysis, read our MLIV blog.
What to watch this week:
- IMF launches the World Economic Outlook update Tuesday.
- U.S. Conference Board consumer confidence Tuesday.
- Fed monetary policy decision Wednesday.
- EIA crude oil inventory report Wednesday.
- U.S. new home sales, wholesale inventories Wednesday.
- South African Reserve Bank rate decision Thursday.
- U.S. initial jobless claims, durable goods, GDP Thursday.
- Euro zone economic confidence, consumer confidence Friday.
- U.S. consumer income, University of Michigan consumer sentiment Friday.
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 0.7% as of 5:32 a.m. New York time
- Futures on the Nasdaq 100 fell 1.2%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The Stoxx Europe 600 rose 1.1%
- The MSCI World index fell 0.1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.4% to $1.1282
- The British pound fell 0.2% to $1.3466
- The Japanese yen fell 0.2% to 114.13 per dollar
Bonds
- The yield on 10-year Treasuries advanced two basis points to 1.79%
- Germany’s 10-year yield advanced three basis points to -0.08%
- Britain’s 10-year yield advanced five basis points to 1.17%
Commodities
- West Texas Intermediate crude rose 1.1% to $84.19 a barrel
- Gold futures fell 0.2% to $1,840.90 an ounce
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