- Futures fail to hold up and turn red.
- S&P 500 falls 0.33% after Friday’s 3.62% plunge.
- US data, corporate results and the Fed in focus.
Stocks in the US show no signs of recovery after Friday’s sharp drop and point to a modest opening loss. Fears about the slowdown in the world economy after data from China weighed on investors’ mood at the start of the week of the Federal Reserve meeting.
Stocks weaken, dollar signs, bonds fall
On Friday, the Nasdaq ended down 4.17% and the S&P lost 3.62%, closing the worst month for US stocks since March 2020. The start of May shows that caution and fears persist, as futures after having spent most of the ground in positive, they have changed to red. In the previous one, the S&P falls 0.33% and the Nasdaq 0.54%.
Over the weekend there was a greater than expected slowdown in China in April, measured by manufacturing and non-manufacturing PMI, impacted by COVID restrictions. This favored pessimism at the open on Monday, with several markets in Europe closed for a holiday.
The negative climate is not preventing the Treasury bond rise on Monday, validating Friday’s advance. The 10-year rate yields 2.91%, after reaching 2.95% hours ago (high since April 22). These rises are helping the dollar to remain firm in the market and occur prior to the Federal Reserve meeting.
The DXY rises again on Monday, after a correction on Friday, although it is below recent highs, trading around 103.40. The CAD and NZD are the worst performers within the G10, affected by falling commodity prices.
The metals are dropping significantly. Gold is trading at $1873, just above April’s bottom and silver is at $22.57, the lowest level since early February. XAG/USD accumulates a streak of ten daily falls in a row.
The rise in yields, together with the dollar heavy weight on metals, which may be ahead of days of persistent volatility considering that the Federal Reserve’s decision will be announced on Wednesday. US manufacturing data for April will be released on Monday with the ISM and the final reading of the S&P Global PMI. In addition, the presentation of corporate results will continue, with BlackRock and American National Group. Later in the week, Airbnb, Shell, Starbucks, Pfizer, Uber, BNP Paribas, Airbus and Hilton will report.
Technical levels
Source: Fx Street
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