U.S. Stocks Could Erase Gains As Global Markets React To China Downgrade

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It is highly likely that the U.S. markets will open on a weak note as indicated by the stock futures. During the early hours, S&P 500 Futures traded 0.10% lower at 2,053.50 while Nasdaq Futures slipped 0.09% to 4,478.

China woes

There are multiple developments reported across the world, which could impact the U.S. equities, Firstly S&P trimmed its outlook on China to negative from stable, noting that the economy is exposed to higher risks. The research firm stated that the economic rebalancing process in China is falling behind the expected base. The downgrade forced most of the Asian indices to finish lower today.

At the same time, the European indices came under pressure after the euro zone economy failed to recover from its negative zone in March for the second month in a row. Preliminary data showed that the deflationary pressures remain strong in the region. The consumer price inflation in the eurozone slipped 0.1% in March, which follows a 0.2% decline in February.

Oil slips, Gold rallies

Alongside this, the oil prices remained under pressure over piling up of oil reserves. According to various reports, both U.S. and OPEC output reserves surged in March that disrupted the beliefs that oil output will be contained sooner. The weakness in nearly all assets sparked a buying interest in Gold, which is heading towards the best quarterly gain in the last 30 years.

Amidst such reports, the U.S. stock market will stay tuned to the initial jobless claims due to release later today. Apart from this, a handful of Federal officials will express their thoughts on the direction of the economy, which will help the market to gauge the monetary outlook. The official nonfarm payrolls report, which is set to release tomorrow will gain the central focus among the market players this week. Analysts have projected the employment reading to see an increase of 205,000 in March while the unemployment rate is projected at 4.9%.

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