Monday October 8th

8-10-2018

Dow futures fall 100 points amid fears of rising rates

U.S. stock-index futures fell ahead of Monday's open as investors fretted over a sharp rise in interest rates. Around 8:30 a.m. ET, Dow Jones Industrial Average futures fell 105 points, indicating a decline of 72.05 points at the open. S&P 500 and Nasdaq 100 futures also fell to start off the week. Interest rates were on a tear last week after the release of several pieces of strong economic data. The benchmark 10-year Treasury note yield rose to above 3.2 percent from around 3.06 percent. On Friday, the U.S. government said the unemployment rate in the U.S. fell last month to a level not seen in close to 50 years. Overall jobs creation disappointed for last month, but that was offset by sharp upward revisions for the number of jobs created in August and July. U.S. Treasurys did not trade on Monday, however, as the bond market remained closed for Columbus day. Investors also fretted over a decline in overseas stocks. Chinese stocks saw declines after the People's Bank of China (PBOC) announced measures on Sunday to cut the amount of cash that banks have to hold as reserves, with the reserve requirement ratios set to be slashed by 100 basis points, effective from next week. The news comes as the nation continues to battle with the U.S. over a tit-for-tat trade war, and is the fourth time the PBOC has slashed its reserve requirement ratio (RRR) in 2018. The Shanghai Composite fell 3.7 percent overnight while Korean Kospi index pulled back 0.6 percent. The Shenzhen composite dropped by 3.834 percent to end at about 1,386.28 on the first trading day since the Golden Week holidays ended. As of 3:21 p.m., Hong Kong's Hang Seng indextraded lower by 1.2 percent. Japan's markets are closed for a public holiday. In Europe, the Stoxx 600 index dropped 0.8 percent. Oil dropped to around $83 a barrel on Monday, pressured by expectations that some Iranian oil exports will keep flowing after the U.S. reimposes sanctions, easing a strain on supplies. Two companies in India, a big buyer of Iranian oil, have ordered barrels in November, India's oil minister said on Monday. The Trump administration is considering waivers on sanctions, a U.S. government official said on Friday. "One way or another, it looks as though India is going to take some Iranian crude," said Olivier Jakob of Petromatrix, adding that the development was helping oil to "retrace some of the price surge we saw last week." Brent crude, the international benchmark, was down $1.07 to $83.09 per barrel at 0817 GMT. It hit a four-year high of $86.74 last week. U.S. crude was down 93 cents at $73.41. Gold fell on Monday as the dollar firmed after China's central bank eased its domestic policy to support the economy amid concerns that an escalating trade dispute with the United States could hurt growth. The People's Bank of China (PBOC) on Sunday announced a steep cut in the level of cash that banks must hold as reserves, stepping up moves to lower financing costs and spur growth. Spot gold was down 0.6 percent at $1,195.61 an ounce at 0725 GMT. U.S. gold futures fell 0.5 percent to $1,199.8 an ounce.