While a far cry from yesterday’s morning rout, global stocks struggled for traction on Thursday after a jittery session on Wall Street where cryptocurrencies crashed and a hint of tapering talk from the U.S. Federal Reserve drove selling in the bond market and lifted the safe-haven dollar.
S&P futures dropped overnight for the 4th straight session after minutes from Fed’s meeting last month showed some officials were open to a debate at “upcoming meetings” on scaling back bond purchases if the U.S. economy continued to progress rapidly, while the ongoing rout in cryptos has not helped sentiment, and just like cryptos futures rebounded from their worst levels (yes, we once again live in a bizarro cojoined world where moves in cryptos move the broader market).
At 7:30 a.m. ET, Dow e-minis were down 100 points, or 0.32%, S&P 500 e-minis were down 8.25 points, or 0.20%, and Nasdaq 100 e-minis were down 7 points, or 0.06%. Treasuries were flat, the dollar and oil dropped.
“It’s not just crypto – although that is the poster child of this movement – but SPACs, recent IPOs, ARK Innovation and Tesla, to name a few, have all lost their bid,” said Chris Weston, head of research at brokerage Pepperstone in Melbourne. “For me, the overriding factor is liquidity and the timing of lower liquidity and that is having huge ramifications – we are debating, not just a slower pace of central bank asset purchases (QE), but when QE comes to an end.”