Thursday October 4th

4-10-2018

US stock futures fall as rising rates put investors on edge

U.S. stock-index futures fell ahead of Thursday's open as rising interest rates dampened investor sentiment. Around 7:10 a.m. ET, Dow Jones Industrial Average futures fell 81 points, indicating a decline of 48.39 points at the open. S&P 500 and Nasdaq 100 futures also signaled a downbeat open. Futures are following the negative sentiment seen in markets overseas, as investors around the world become jittery over rising rates. In the previous session, the yield on the 10-year Treasury note hit its highest level since July 2011, while the yield on the 30-year Treasury bond reached the highest it's been since October 2014. The yields surged on Wednesday following new data that showed that private payrolls rose by 230,000 in September, according to ADP and Moody's Analytics, which far surpassed the 168,000 jobs in August. Elsewhere on Wednesday, the ISM non-manufacturing index hit its highest level on record. The sharp rise in rates and recent comments from the Federal Reserve put markets on edge Thursday, with domestic and international equity markets trading lower. On Wednesday, Fed Chair Jerome Powell said that the U.S. central bank had a long way to go before interest rates hit neutral, suggesting to markets that more hikes could be on the horizon. On Thursday, jobless claims are due out at 8:30 a.m. ET, followed by factory orders at 10 a.m. ET. September's nonfarm payrolls data is due out Friday morning. In central banking news, Vice Chairman Randal Quarles will be in St. Louis, Missouri, where he is expected to attend the Community Banking in the 21st Century Research/Policy Conference. In corporate news, Constellation Brands and Costco are scheduled to publish earnings. Elsewhere, investors around the globe are keeping abreast of any fresh trade news, as the tit-for-tat trade war between Washington and Beijing shows no signs of alleviating. On Sunday, Canada joined a new trade deal with the U.S. and Mexico; the United States-Mexico-Canada Agreement (USMCA) is expected to be signed by the end of November. Asia markets were lower on Thursday, with investors grappling with rising rates after strong U.S. economic data was released overnight. The Nikkei 225 slid by 0.56 percent to close at 23,975.62, while the Topix index ended the trading day slightly weaker at 1,801.19. The Kospi continued to slide, by 1.52 percent, to close at 2,274.49, following news reports that Bank of Korea Governor Lee Ju-yeol hinted at a possible policy rate hike later in October. Hong Kong's Hang Seng index also lost 1.77 percent in the afternoon. China's markets are closed for the Golden Week holidays. Oil held near four-year highs on Thursday, supported by the imminent loss of Iranian supply through U.S. sanctions, but also tempered by the prospect of a rapid production boost from Saudi Arabia and Russia. Brent crude oil futures were down 16 cents at $86.13 a barrel by 0914 GMT, having risen to a late 2014 high of $86.74 the day before. U.S. crude futures were also down 16 cents, at $76.25. Gold prices moved in a narrow range on Thursday after upbeat U.S. economic data and hawkish comments from Federal Reserve policymakers raised prospects of the central bank sticking to its tighter monetary policy, boosting the dollar. About half of the Fed's policymakers, including chairman Jerome Powell, used public appearances on Wednesday to show an increasingly unified view that the U.S. economy was not headed for any obvious potholes. Further supporting the dollar was data showing strength in the U.S. job market, with service sector activity racing to a 21-year high in September. Spot gold was up 0.1 percent at $1,198.06 an ounce, as of 0711 GMT, after dropping 0.5 percent in the previous session. Prices hovered in a narrow range between $1,195.36 and $1,199.01 on Thursday. U.S. gold futures dipped 0.1 percent to $1,201.9 an ounce.