Market dynamics in the moment (futures): S&P 500: +0.32% Nasdaq: +0.47% Dow Jones: +0.21% Gold: +0.71% ($1752) Brent oil: +3.18% ($85.86) US Treasuries 10 years: +0.71% (3.709%/year).
U.S. stock index futures are trading in the green. Yesterday the major indices ended the day down, with the S&P 500 down 1.54%, the Dow Jones down 1.45% and the Nasdaq down 1.58%. The stock market reacted by falling on new signs of a worsening epidemiological situation in China, which could slow global economic growth. Market participants also priced in hawkish comments from Fed officials. The Asian stock market is trading mostly in the green zone.
Chinese authorities announced the introduction of new quarantine restrictions after the daily number of COVID-19 disease exceeded 40 thousand. These measures have caused mass civil protests in the country.
Against the backdrop of the news from China, oil prices dropped significantly, but later began to recover due to media reports that OPEC+ will consider reducing crude production at the next meeting.
“There are some real reasons for caution. The market rose strongly this quarter, and there are concerns that the rebound will slow. Events in China have only encouraged investors to lock in the gains they made this quarter,” said Adam Parker of Trivariate Research.
St. Louis Fed President James Bullard said yesterday that financial markets are underestimating the likelihood that the central bank will have to raise interest rates more aggressively next year to rein in inflation, which has reached 40-year highs.
Bullard reiterated that the Fed needs to reach at least the lower end of the 5-7% range if policies are to be tough enough to suppress price increases. Moreover, Bullard believes the central bank will have to hold the rate through 2023 and possibly into 2024.
Shares of Apple #AAPL were down 2.63% on the news that the company may face a 6 million unit production cut of iPhone Pro due to recent protests at its production center in Zhengzhou, China.
Coinbase #COIN, Riot Blockchain #RIOT and Marathon Digital #MARA are down about 4% each after it was reported that cryptocurrency lender BlockFi filed for bankruptcy.
