Wall St Futures, Oil Plunge As Markets Brace For Swift US Rate Cut
Asian markets faced more turmoil on Monday as fears of a global trade war sent Wall Street futures plunging, while investors bet rising recession risks could lead to a US interest rate cut as early as May.
S&P 500 futures fell 4.79% in volatile trade, while Nasdaq futures plunged 5.78%, adding to last week’s nearly $6 trillion market loss. [.N]
Nikkei futures fell 3.9% to 31,105, representing a 3,000-point drop for the cash index, which closed at 33,780 on Friday.
A bleaker global growth outlook kept oil prices under heavy pressure, following last week’s sharp decline. [O/R]
Brent fell $2.12 to $63.46 a barrel, while U.S. crude plunged $2.05 to $59.94 a barrel.
The rout came as White House officials showed no sign of backing down on their tariff plans, and China said the market was already talking about retaliating with levies on U.S. goods.
President Donald Trump told reporters that markets need to take medicine and that he would not make a deal with China until the U.S. trade deficit is addressed.
The flight to safe havens sent Treasury futures jumping a full point, a rare move for Asian trading, while Fed funds futures jumped to price in an additional quarter-point interest rate cut from the Federal Reserve this year.
The market swung to imply about a 70% chance the Fed could cut as early as May, although Chairman Jerome Powell said Friday the central bank was in no rush to set rates. The dovish shift sent the dollar down another 1% against the safe-haven Japanese yen to 145.38 yen, while the euro held firm at $1.0987.
"The magnitude and disruptive impact of U.S. trade policy, if sustained, would be enough to tip the still-healthy U.S. and global expansions into recession," said Bruce Kasman, chief economist at JPMorgan, who estimated a 60% downside risk.
"We continue to expect the Fed to ease first in June," he added. "However, we now think the Committee cuts rates at every meeting through January, lowering the target range for the fed funds rate to 3.0%."
Source: Investing.com
