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Jun 16, 2016

U. S. Stock Markets Future Indications, by MarketWatch - June 16, 2016: U.S. Stock Market Future Indications Extend Losses as Central Banks Highlight Brexit Risk

Ellie Ismailidou, Sara Sjolin
U.S. stock futures extended losses Thursday morning, as investors fretted about a potential U.K. exit from the European Union, with the Federal Reserve, the Bank of England and Bank of Japan raising concerns about next week’s so-called Brexit referendum.

Adding to the bearish sentiment was a sharp drop in oil prices CLN6, -1.81% along with news that a reading on inflation missed expectations, while initial jobless claims rose. Ahead of the opening bell, the main benchmarks looked set for a sixth straight session of losses.
Futures for the Dow Jones Industrial Average YMU6, -0.48%  lost 87 points, or 0.5%, to 17,465, while those for the S&P 500 index ESU6, -0.53%  gave up 11 points, or 0.5%, to 2,061. Futures for the Nasdaq-100 index NQU6, -0.53%  dropped 24 points, or 0.5%, to 4,389.
“Tin hats time. Markets are in full risk-off mood after the Fed flagged Brexit as a very real threat to growth. Low interest rates are here to stay, and that could be it for the year,” said Joe Rundle, head of trading at ETX Capital, in a note.
The Fed on Wednesday signaled it will delay interest rate increases, demonstrating it’s not overly confident in the economy. U.S. stocks relinquished modest gains and closed lower after the Fed decision. The S&P 500 index SPX, -0.18%  and the Dow average DJIA, -0.20%  both ended the session down 0.2%.
Meanwhile, the Japanese central bank on Thursday made no changes to its asset-purchase program or interest rates. The lack of action was interpreted as caution ahead of the June 23 Brexit referendum.
Read: Brexit fears lead Bank of Japan to leave rates unchanged
“Japan’s decision to stand pat on rates has rattled markets, prompting a further rush to safety that’s sent the yen soaring to fresh highs,” Rundle said. “These central banks are being cautious because of the hazards from overseas—the number one threat right now is that Britain could leave the EU.”
Asian markets slumped after the BOJ decision, while the yen USDJPY, -1.73%  rallied. The dollar was buying ¥104.31, down from ¥106.01 late Wednesday in New York.
On Thursday, the Bank of England also kept its key interest rate unchanged at a record low of 0.5% and made no changes to its 375-billion-pound ($530 billion) asset-purchase program. The BOE said in a statement that a potential vote to leave the EU could materially alter the outlook for output and inflation in the U.K.
In another sign of safe-haven flows, gold GCQ6, +1.98%  continued to march higher, to trade comfortably above the $1,300 level. Some analysts say gold could rise to $1,400 an ounce if the U.K. chooses to ditch the European Union.
Read: Gold just scored a ticket to ride higher from Fed’s Yellen
Brexit 101: The U.K.'s EU referendum explained
Should the U.K. remain in or leave the European Union? That's the question the British public will decide in a referendum on June 23. Here’s what's at stake.
Other economic news: The Philadelphia Fed manufacturing index showed mild improvement in June, rising to a reading of 4.7 in June from negative 1.8 in May. This is only the second positive reading in the past 10 months.
At 10 a.m. Eastern, the June home builders’ index is scheduled for release. Check out MarketWatch’s economic calendar.
Movers & shakers: Drug store chain Rite Aid Corp. RAD, -0.13%  fell 1.5% premarket after the company reported a quarterly loss Thursday, missing expectations on profit and sales.
Gold-related assets were among biggest advancers premarket on Thursday, with shares of Eldorado Gold Corp. EGO, +3.60% and the Direxion Daily Gold Miners Index Bull 3x Shares NUGT, +11.67%  rising.
Jabil Circuit Inc. JBL, -0.32%  may also move early Thursday after the Apple Inc. AAPL, -0.33% supplier late Wednesday released a weak outlook for the fourth quarter.
Airbnb Inc. has signed a $1 billion debt facility deal with a group of large U.S. banks, Bloomberg reported Thursday, citing people familiar with the matter. The home-rental company is not a publicly traded company.
Other markets: European markets were awash in a sea of red, as traders grappled with the results of an influential Brexit poll that showed a lead for the “leave” camp.
The dollar DXY, +0.57%  was mostly higher against other major currencies, but slid against the yen.