(Bloomberg) — U.S. futures fell with stocks as surging energy prices stoked inflationary pressures ahead of a key U.S. employment report. Treasury yields extended an advance.
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S&P 500 and Nasdaq 100 contracts declined, with tech giants such as Apple Inc. and Facebook Inc. down in premarket trading. European equities slid to a two-month low, with natural gas prices soaring even as the European Union pledged swift action to ensure the spiking costs don’t stifle the economy. MSCI Inc.’s Asia-Pacific index also dropped.
The pound weakened as a market-based measure of expected inflation in the U.K. over the next decade hit a 13-year high.
Markets have turned more volatile since global stocks hit a record last month, with the energy supply crunch adding to investor worries about inflation, slowing growth and the prospect of reduced Federal Reserve stimulus. A private U.S. payrolls report later today may offer clues on the country’s labor market ahead of Friday’s keenly-watched government data.
“Right now you’re seeing inflation risk really start to percolate and I do think that you’re going to see that really eat into margins as we go through the fourth quarter into 2022,” Erin Browne, multi-asset portfolio manager at Pimco, said on Bloomberg Television. “The energy crisis that’s starting to loom in Europe is a real risk that is being underestimated by the market right now.”
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The yields on 10-year and 30-year U.S. Treasuries both reached the highest since June, while oil edged lower from a seven-year high. Faster-than-expected U.S. service-sector activity and price pressures from spiraling costs for crude oil and natural gas are adding to the case for a reduction in Fed bond-buying.
In the U.K., the so-called 10-year breakeven rate climbed as much as 10 basis points to 4.08%, spurred by a spike in energy costs that may hike up consumer prices. In response, money market have almost fully priced a rate hike from the Bank of England as soon as December, in what would be its first increase in over three years.
Elsewhere, Bitcoin fell below the $51,000 mark.
For more market analysis, read our MLIV blog.
Here are some events to watch this week:
Some of the main moves in markets:
Stocks
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Futures on the S&P 500 fell 1.2% as of 6:01 a.m. New York time
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Futures on the Nasdaq 100 fell 1.4%
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Futures on the Dow Jones Industrial Average fell 1%
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The Stoxx Europe 600 fell 1.9%
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The MSCI World index fell 0.6%
Currencies
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The Bloomberg Dollar Spot Index rose 0.5%
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The euro fell 0.5% to $1.1541
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The British pound fell 0.6% to $1.3553
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The Japanese yen was little changed at 111.50 per dollar
Bonds
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The yield on 10-year Treasuries advanced two basis points to 1.54%
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Germany’s 10-year yield advanced two basis points to -0.17%
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Britain’s 10-year yield advanced five basis points to 1.13%
Commodities
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West Texas Intermediate crude fell 0.5% to $78.55 a barrel
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Gold futures fell 0.7% to $1,748.30 an ounce
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