Today looks like it will be another rough day for U.S. stock markets as the futures market booked record losses during early trading. S&P 500 Futures tanked by 2.02% to 1,809.50 while Nasdaq Futures lost 90 points to 3,877.25 during early hours. Moreover, the bearish mood across the global markets will reflect on Wall Street.
Dollar and oil sank
The developments throughout the day point to negative momentum on Wall Street. Firstly, the U.S. Dollar made a fresh low against the safe-haven yen after it dived to a level of 111 against the currency. The greenback is as much as 8% down against the yen currently. Apart from this, the dollar remained weak against major currencies after the Federal Reserve’s statement disrupted the sentiment over the U.S. economy.
Another key aspect, oil has further dampened the sentiment. West Texas Intermediate fell to a level near $26, a level lowest in 13 years. The record crude stock reserves at the Cushing delivery refinery weighed over the decline in U.S. crude reserves during the last week.
Falling Dollar and oil have prompted a rally in Gold and bonds, indicating that the investors are shying away from equities to invest in safer assets. Gold futures breached its May peak level today at $1,230. The momentum was equally strong in U.S., German and U.K. sovereign bonds, the prices of which ticked higher as investors anticipate the global economic situation to worsen.
Asian markets slumped excessively even as Tokyo remain closed for the New Foundation day holiday. Hang Seng’s first trading day in Lunar New Year was bitter as it closed 4% down on the back of the global uncertainty. In the euro zone, a fresh sell-off in banking stocks led the bearish momentum in markets. All of the major indices traded deep red today after market participants stressed over the vulnerability of banks to the global crisis.