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Jun 27, 2016

U.S. Stock Market Future Indications - June 27, 2016: U.S. Stocks Set for Loses as Brexit Backlash Continues

www.marketwatch.com


 

Sara Sjolin
Wall Street was set for another downbeat session on Monday, as shock waves from the U.K.’s Brexit vote last week continued to chill the investing mood in global financial markets.

Futures for the Dow Jones Industrial Average YMU6, -0.51%  dropped 72 points, or 0.4%, to 17,173, while those for the S&P 500 index ESU6, -0.50%  fell 2,010.50 points, or 0.4%, to 2,010.50. Futures for the Nasdaq 100 index NQU6, -0.63%  lost 22.25 points, or 0.5%, to 4,240.
Read: S&P 500 could drop as much as 7% in Brexit swoon
The losses follow a major selloff on Friday, when investors shunned anything considered a risky asset. The selloff came after the U.K. unexpectedly voted to leave the European Union, which it has been a member of for 43 years.
That vote sparked a drop of more than 650 points for the Dow average DJIA, -3.39%  at one point, before it trimmed losses to close 611 points, or 3.4% lower. The Nasdaq Composite Index COMP, -4.12%  and S&P 500 index SPX, -3.59%  lost 4.1% and 3.6%, respectively.
“There is little doubt that global monetary policy will have to adjust to this historic decision, and with markets now pricing in a 50% chance of a July rate cut from the [Bank of England], the idea of a [Federal Reserve] rate hike appears dead in the water,” said Joshua Mahony, market analyst at IG, in a note.
Fed Chairwoman Janet Yellen said ahead of Thursday’s historic referendum in the U.K. that a Brexit was one of the risks facing the global economy that could justify a cautious approach to raising interest rates. According to the CME Fed Watch tool, there’s currently a 0% probability of a Fed rate hike in July.

Banking blues: Banks were among the biggest decliners in Friday’s Brexit-fueled selloff and were mostly set for more losses on Monday.
Shares of Bank of America Corp. BAC, -1.77%  lost 1.3% premarket, while J.P. Morgan Chase & Co. JPM, -6.95%  fell 0.9%, and Goldman Sachs Group Inc. GS, -1.24%  slipped 0.6%.
Other movers and shakers: U.S.-listed shares of Randgold Resources Ltd. GOLD, +3.13%  climbed 4.1% ahead of the bell as gold continued to rise in a post-Brexit flight to safety.
Economic news: Data for May advance trade in U.S. goods come out at 8:30 a.m. Eastern Time, followed by Markit’s flash reading on the U.S. services purchasing managers’ index for June, due at 9:45 a.m. Eastern.
There were no Fed speakers scheduled to talk on Monday. See:MarketWatch’s economic calendar
Other markets: The pound GBPUSD, -3.2831%  was hit hard again, sliding to $1.3280 from $1.3676 late Friday in New York. Sterling plunged to as low as $1.3230, the lowest since 1985, early Friday after it became clear the U.K. had voted to exit the EU.
The Brexit fallout continued to keep European stock markets under selling pressure. The Stoxx Europe 600 index SXXP, -2.43%  was down 2.2%. The FTSE 100 index UKX, -1.25%  was off 1.2% with the main British political parties, the Conservatives and Labour, in turmoil after the referendum.
Stocks in Asia mostly rebounded. Japan’s Nikkei 225 index NIK, +2.39%  rallied 2.4%, helping lead much of Asian equities higher.
The dollar DXY, +0.35%  rose against most other major currencies, while oil prices CLQ6, +0.04% LCOQ6, +0.19%  moved lower.
The yield on 10-year U.K. government bonds TMBMKGB-10Y, -11.63%   dropped below 1% for the first time ever on Monday.