(Bloomberg) — US stock futures edged lower on Monday and Treasuries held steady as traders recalibrated their bets in the wake of last week’s selloff. Brent crude fell below $77 a barrel.
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Contracts on the S&P 500 declined 0.2% with Boeing retreating almost 10% after a fuselage section on a 737 Max 9 aircraft ejected during a flight over the weekend. Spirit AeroSystems Holdings Inc., which installed the panel, slumped 21%. Oil slid almost 3% after Saudi Arabia cut official selling prices for all regions amid persistent weakness in the market. European stocks followed declines in Asia.
Markets are looking for direction after mixed US economic data on Friday capped a week that saw global equities sink the most since October on speculation the Federal Reserve was in no rush to reduce interest rates. Further catalysts may come from the US inflation print due Thursday and the earnings season kicking off Friday with US financial names including JPMorgan Chase & Co and Citigroup Inc.
“Multiples are already priced at rich levels,” BNP Paribas analysts including Calvin Tse and Sam Lynton-Brown wrote in a note. “With the probability of a disappointment in full-year earnings elevated, we believe that downside risks outweigh upside ones.”
Read More: High-Flying Profit Forecasts Head Back Down to Earth: MLIV Pulse
According to Bloomberg’s latest Markets Live Pulse survey, the consensus estimate of sell-side analysts is that S&P 500 earnings this year will reach historic levels, but those forecasts are too high. The poll shows an economic slowdown is the biggest risk for the bottom lines this year.
In Europe, German factory orders rose much less than anticipated in November, a discouraging sign for Europe’s largest economy, data showed on Monday.
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Seizing Yields
The yield on US Treasuries declined one basis point to 4.04%. Some traders are unfazed by the recent pullback, seeing it as a chance to seize on elevated yields before the Federal Reserve starts driving down rates.
The dynamic was on display Friday, when bond prices dipped after the Labor Department reported that job growth unexpectedly accelerated last month. But the selloff was curtailed because buyers swooped in as 10-year Treasury yields neared 4.1%, the highest since mid-December.
In Asia, the Hang Seng China Enterprises Index closed down 2.3%, led by a selloff in technology shares. Sentiment remains quite negative in China, Nomura Group analysts including Chetan Seth in Singapore wrote in a client note. “There have been more signs of support for the economy, but equity investors still do not appear convinced,” they said.
Elsewhere, Brent halted last week’s rally after the Saudi price cuts. The reductions underscored a worsening global outlook amid strong global supply, including from the US, and outweighed concern over Red Sea tensions and supply disruptions in Libya.
Key events this week:
Eurozone economic confidence, retail sales, consumer confidence, Monday
Atlanta Fed President Raphael Bostic speaks, Monday
US House returns from recess, Monday
Australia retail sales, Tuesday
Japan Tokyo CPI, household spending, Tuesday
Eurozone unemployment, Tuesday
World Economic Forum’s global risks report released, Wednesday
US wholesale inventories, Wednesday
Deadline for US Securities & Exchange Commission to vote on Bitcoin ETF applications, Wednesday
New York Fed President John Williams speaks, Wednesday
US CPI, initial jobless claims, Thursday
China CPI, PPI, trade, Friday
France CPI, Friday
UK industrial production, Friday
US PPI, Friday
Bank of America, Bank of New York Mellon, BlackRock, Citigroup, JPMorgan Chase and Wells Fargo report fourth-quarter results, Friday
Minneapolis Fed President Neel Kashkari speaks, Friday
Stocks
The Stoxx Europe 600 fell 0.3% as of 11:22 a.m. London time
S&P 500 futures fell 0.2%
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average fell 0.5%
The MSCI Asia Pacific Index fell 0.7%
The MSCI Emerging Markets Index fell 0.7%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0947
The Japanese yen rose 0.1% to 144.44 per dollar
The offshore yuan fell 0.1% to 7.1702 per dollar
The British pound was little changed at $1.2709
Cryptocurrencies
Bitcoin fell 0.3% to $44,113.22
Ether fell 0.8% to $2,224.36
Bonds
The yield on 10-year Treasuries declined one basis point to 4.04%
Germany’s 10-year yield advanced two basis points to 2.18%
Britain’s 10-year yield advanced three basis points to 3.82%
Commodities
Brent crude fell 2.8% to $76.58 a barrel
Spot gold fell 1.1% to $2,022.03 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess, Tassia Sipahutar and Alice Gledhill.
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