US stock futures extended declines in a fourth straight session Friday, while global equities fell to their lowest level in two years as investors pulled out of risk markets amid aggressive signals from central banks and slumping global growth.
The Federal Reserve’s 75 basis point rate hike earlier this week, the third in a row, was mirrored this week by both movements and rhetoric from central banks around the world, which pushed up benchmark borrowing costs and tapered global equities.
Further jumbo rate hikes are also on the horizon, with the CME Group’s FedWatch indicating a 77.1% chance of another 75 basis point increase in November, down from 0% at the end of August.
For the most part, the hawkishness has benefited only the US dollar, which rose to another 20-year high against its global counterparts despite the Bank of Japan’s first foreign exchange intervention – aimed at strengthening the precipitated yen. . since 1998.
Data on economic activity from Europe underlined the impact of both rate hikes and aggressive signals, with the German manufacturing sector contracting deeply in September and the region-wide composite PMI staying below 50 points, pointing to growth for the second consecutive month.
In the US, where the Atlanta Fed’s GDPNow forecast tool suggests growth of just 0.3% in the third quarter, the bond market continues to issue recession warnings, with two-year bond yields rising to 4 overnight. .19%, putting them about 44 basis points north of 10-year notes.
US Treasury yields have actually risen more than 110 basis points since August 1, Bank of America noted in its weekly “Flow Show” report, kicking off global bond markets for their biggest annual declines in more than seven decades. .
Goldman Sachs, meanwhile, lowered its full-year target for the S&P 500 to 3,600 as investors became even more concerned about a so-called “hard landing” for the world’s largest economy.
The US dollar index rose another 0.65% during overnight trading to a new two-decade high of 112,078, pushing both the euro to 0.9767 and the pound to their lowest levels against the greenback in more than a decade. than 37 years.
Shares in Europe were also in the red again on Friday, with the Stoxx 600 lower 1.6% during afternoon trading in Frankfurt and the FTSE 100 1.57% lower in London as Finance Minister Kwasi Kwarteng delivered the first budget under the new Prime Minister Liz Truss.
This followed a 1.65% drop for the MSCI ex-Japan index in Asia, as equities in China remain at four-month lows amid renewed concerns about growth in the world’s second-largest economy. .
In the US, futures contracts linked to the S&P 500 indicate a 44-point drop from the opening bell, the Dow Jones Industrial Average is priced for a 315-point pullback. Futures linked to the tech-focused Nasdaq point to a 155-point downward move.
Costco (COST) equities were a notable pre-market mover, falling 3.3% after the bulk retailer posted stronger-than-expected profit margins in the fourth quarter, but saw profit margins narrow amid persistently high input costs.
DocuSign (DOCU) shares were active but fell 1.8% amid the sell-off of tech stocks after the online signature sales group named former Google ad executive Allan Thygesen as the group’s CEO.
Boeing (BA) fell 0.8% after the aircraft maker, as well as former CEO Dennis Muilenburg, agreed to pay just over $200 million in fines to the U.S. Securities and Exchange Commission for misleading investors in the wake of two fatal crashes of its 737 MAX -aeroplane.
Apple (AAPL) meanwhile, appears to have stolen a march on its major tech rivals in the bidding war for rights to the NFL Sunday Ticker program package after reaching a deal Thursday to sponsor the Super Bowl halftime show.