Equity futures are once again tracking global markets. That was encouraging yesterday as stocks were recovering, but today is looking more like Monday as equities tank across the globe. China’s Shanghai Composite closed 4.3% lower, subtracting further from Monday’s 5.8% loss, which was its worst day in nine months. Stocks in Europe are also faring poorly with the Euro Stoxx trading down 1.3%, led by a 1.2% fall in Germany’s Dax and a 1.2% fall in England’s FTSE 100.
Currently, Dow futures are down 67 points to 9,140, while the benchmark S&P 500 is down 8 points to 982.
“S&P 500 index futures are threatening to give back all of yesterday’s 1% advance,” noted analysts at BMO Capital Markets. “China’s stock market plunged 4.3%, and is now trolling bear market territory with a drop of almost 20% from its recent high of two months ago, raising concerns about its economic prospects.”
Treasuries, meanwhile, are rallying, with the 10-year yield down 8 basis points to 3.44% and the 2-year yield trading south of 1%.
The only bit of US macroeconomic scheduled for today has already been released, and though it was good news it is unlikely to help equities much. The Weekly Mortgage Applications Survey showed average rates for a 30-year mortgage fell 23 basis points to a 6-week low at 5.15% last week, which helped to boost purchases (+3.9%), refinancing (+6.9%), and new loans for mortgages (+5.6%)
Other decent news came out after the closing bell yesterday, as a weekly survey measuring consumer sentiment inched upwards. The ABC Consumer Comfort Index rose one point to -46 in the week ending August 16 ― a deeply pessimistic score overall, but at least it’s heading in the right direction, albeit slowly.
Aside from the global dip in equities, the major headline today comes from Warren Buffett, who warned in the New York Times that US debt could get out of control.
“The United States economy is now out of the emergency room and appears to be on a slow path to recovery,” he wrote. “But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.”