Tuesday October 9th

9-10-2018

Dow futures fall 150 points as 10-year yield hits highest level since 2011

U.S. stock-index futures fell on Tuesday as concerns over rising interest rates dampened investor sentiment once again. Around 7:45 a.m. ET, Dow Jones Industrial Average futures dropped 150 points, indicating a decline of 102.78 points at the open. S&P 500 and Nasdaq 100 futures also pointed to a lower open. The benchmark 10-year Treasury note yield rose to 3.25 percent and hit its highest level since 2011. The longer-term 30-year bond yield also reached its highest mark since 2014. Investors have been grappling with higher interest rates after the release of strong economic data last week. Comments from the top Federal Reserve official also boosted rates. Fed Chairman Jerome Powell said monetary policy was "a long way" from neutral, indicating more rate hikes are coming. Higher rates and expectations of tighter monetary policy are a drag on stock markets, given that they cap companies' profits, thus restricting possible dividends to investors and higher pay for the employees. The S&P 500 and the Nasdaq Composite entered Tuesday riding a three-day losing streak, while the Dow posted a small gain in the previous session. Asia markets were broadly lower on Thursday. Chinese markets, however, made a partial recovery after declines in the previous session that followed the country's central bank cutting the reserve requirement for banks over the weekend. The Shanghai composite rose by 0.17 percent to close at around 2,721.02 while the Shenzhen composite lost its earlier gains to end largely flat at about 1,385.09. Japan's Nikkei 225 closed lower by 1.32 percent at 23,469.39 and the Topix index fell 1.76 percent to end the trading day at 1,761.12. As of 2:56 p.m. HK/SIN, Hong Kong's Hang Seng index continued to beat the general downward trend to trade slightly stronger despite losing its earlier gains. South Korea's markets were closed for a public holiday. Oil prices rose on Tuesday on growing evidence of falling crude exports from Iran, OPEC's third-largest producer, before the imposition of new U.S. sanctions and a partial shutdown in the Gulf of Mexico due to Hurricane Michael. Benchmark Brent crude was up 60 cents at $84.51 a barrel by 8:33 a.m. ET (1233 GMT), having fallen as low as $82.66 on Monday. Brent hit a four-year high of $86.74 last week. U.S. West Texas Intermediate crude was up 42 cents at $74.71. WTI hit $76.90, a nearly four-year high, last week. Gold prices edged higher on Tuesday drawing some safe-haven bids from risk-averse investors as Asian stocks fell amid worries over a potential slowdown in China's economic growth and as the dollar eased against the yen. Spot gold was up 0.3 percent at $1,190.65 an ounce at 0355 GMT. On Monday, it fell 1.2 percent, its biggest one-day percentage fall since Aug. 15, and also touched a more than one-week low of $1,183.19. U.S. gold futures rose 0.5 percent to $1,194.40 an ounce.