US futures and global stocks dropped Monday morning as investors continued to worry about the health of our economy. Those fears have been heightened now that the Fed said it could be more aggressive with interest rate hikes next month and the extended COVID lockdowns in Beijing. This follows Friday’s slide in US equities, when the Dow clocked its worst day since October 2020. Also on Friday, Bank of America noted that investors pulled $17.5 billion out of global equities within the past week, saying there’s more to come. Investors also removed $8.7 billion from bonds and $55.4 billion from cash, according to MarketWatch, putting $900 million into gold.
Business Insider/Shalini Nagarajan
Dow futures fall 330 points, global stocks tumble as central banks’ hawkishness and Chinese lockdowns intensify worries about economic growth
US futures tumbled Monday alongside sharp falls for stocks around the world, as investors fretted about risks to economic growth from more-aggressive central bank policy and China extended lockdowns to Beijing.
Futures on the Dow Jones were down almost 1%, or 333 points, as of 5:20 a.m. ET, and S&P 500 futures fell 1%. Meanwhile, Nasdaq futures dropped 0.9%, suggesting a lower start to trading later in the day. The S&P 500 is down nearly 6% since the end of March.
The indicated declines follows a slide in US equities Friday, when the Dow notched its worst day since October 2020 to drop 981 points.
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MarketWatch via TechStory
A massive $17.5 billion has been taken out of global equities by investors
Are the bears just getting started?
That’s a question posed by strategists at Bank of America, who noted Friday that investors pulled $17.5 billion out of global equities over the past week, making for the biggest weekly outflow so far this year.
They cautioned that those outflows could well deepen. Since Nov. 2021, Nasdaq peak inflows to stocks have occurred in 16 of 20 weeks, for a total of $229 billion, while private clients bought stocks 17 out of 20 weeks, pointed out Bank of America’s Michael Hartnett, who provided the below chart: here.
Investors also pulled $8.7 billion out of bonds and $55.4 billion from cash, pouring $900 million into gold.
Read the full story, here.
Central banks need to put rates into the ‘pain zone’ — but the Fed won’t do it, fund manager says
Overcoming doggedly high inflation requires interest rates to be pushed into the “pain zone.” But whether any central bank has the nerve to do it is the question, according to investment manager Man Group.
“To actually fight inflation will require a central bank to show that they’re willing to put rates into the pain zone,” CEO Luke Ellis told CNBC’s Geoff Cutmore Monday.
For the Federal Reserve, that task should be “relatively easy,” given the backdrop of strong real and nominal growth in the U.S. For the European Central Bank, battling a lackluster growth environment, the job is somewhat harder, he acknowledged.
Still, Ellis said he doubted that even the Fed would have the conviction to move aggressively enough this year — especially as headline inflation figures show signs of tapering off and U.S. midterm elections approach in November.
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