(Bloomberg) — US equity futures slipped at the end of a week that saw a pullback in megacap technology stocks broaden into a wider selloff amid signs of a weakening economy.
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Contracts on the S&P 500 fell about 0.1% after almost every major group in the index fell on Thursday as the benchmark dropped nearly 1%. Earlier in the week, a wide array of companies soared in just a few days, outperforming the cohort of big techs. Europe’s stock benchmark fell for a fifth day, on track for the longest losing streak since October.
US initial jobless increased by the most since early May, data showed Thursday, a sign of cooling in the labor market that supports expectations the Federal Reserve will soon cut interest rates. But concerns about the health of the economy — and the potential impact of a second Donald Trump presidency upending markets — are now moving to the forefront.
“From a big-picture perspective, both the Fed moving towards a rate cut and Trump odds increasing should be risk positive,” said Mohit Kumar, a strategist at Jefferies International Ltd. “But it also meant that investors reconsider their asset and sector allocation as we head into the summer months. Sectors with heavier positioning suffered in the adjustment.”
There’s a risk of a setback for the equities this summer, according to Goldman Sachs Group Inc. strategists. The correction could result from “the combination of weaker growth data, already more dovish central bank expectations and rising policy uncertainty into the US elections,” according to strategists led by Christian Mueller-Glissmann.
Treasury yields dipped after 10-year yields rose four basis points to 4.20% Thursday. An index of the dollar held on to gains from the prior session.
Travel and leisure stocks and basic resources led a broad-based decline in Europe. Sartorius AG plunged more than 13% after the German electronics maker lowered its full-year guidance. Computer-games maker Ubisoft Entertainment SA fell more than 8% after a mixed release on full-year targets.
Meanwhile, technical glitches disrupted services at airlines, banks and the London Stock Exchange on Friday, an unusual cascade of failures that erupted from the US to Asia after Microsoft Corp. reported an outage across its online services. LSE Group Plc fell almost 1%.
The MSCI Asia Pacific Index declined more than 1%, set for its biggest weekly drop in three months. Chinese stocks in Hong Kong slumped as the Third Plenum failed to convince investors about the economy’s new growth impetus.
Asian currencies slipped against the greenback amid the equities selloff, with the Taiwanese dollar reaching its weakest level in more than eight years. A rout in chip stocks continued in Asia on concern the US would impose fresh restrictions on sales to China. Shares of Taiwan Semiconductor Manufacturing Co. fell for a third day.
In commodities, oil edged lower on concerns that Chinese growth may slow and jeopardize consumption. Copper headed for its worst weekly loss since 2022 and iron ore extended a slump toward $100 a ton. Gold also fell.
Key events this week:
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Fed’s John Williams, Raphael Bostic speak, Friday
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Canada retail sales
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 fell 0.4% as of 8:16 a.m. London time
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S&P 500 futures fell 0.1%
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Nasdaq 100 futures fell 0.1%
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Futures on the Dow Jones Industrial Average fell 0.2%
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The MSCI Asia Pacific Index fell 1.2%
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The MSCI Emerging Markets Index fell 1.4%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro fell 0.1% to $1.0884
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The Japanese yen was little changed at 157.25 per dollar
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The offshore yuan was little changed at 7.2795 per dollar
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The British pound fell 0.1% to $1.2928
Cryptocurrencies
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Bitcoin rose 0.3% to $63,979.34
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Ether rose 0.2% to $3,422.05
Bonds
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The yield on 10-year Treasuries declined one basis point to 4.19%
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Germany’s 10-year yield was little changed at 2.42%
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Britain’s 10-year yield was little changed at 4.06%
Commodities
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Brent crude fell 0.6% to $84.59 a barrel
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Spot gold fell 1.1% to $2,417.91 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Zhu Lin, John Cheng, Winnie Hsu and Michael Msika.
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