US futures continue to collapse in early trading amid economic and geopolitical concerns – London Business News | Londonlovesbusiness.com

S&P 500 (E-mini) futures continued their sharp decline at the start of the week, down 2.5%, to their lowest levels since May.

The collapse comes amid concerns about the health of the US economy after Friday’s shocking data, coupled with the uncertainty created by poor earnings season and heightened geopolitical tensions in the Middle East.

The extremely negative non-farm payroll figures sparked a wave of concern about the possibility of achieving a hard landing in light of rising interest rates.

This in turn led directly to a sharp and unprecedented swing in market expectations about interest rates, and they are now almost certain to expect the Fed to cut by 50 basis points in September, in addition to a more than 50% chance of achieving a 75-point cut between November and December, according to the CME FedWatch Tool.

Read more related news:

Fears of a global financial crash as FTSE 100 plummets and Nikkei collapses

Bonds have been on the rise amid the stock market crash, with the 10-year Treasury note yield hitting its lowest level in more than a year today at 3.77%. Bond funds also gained further traction Friday as they emerged as a safe haven yielding yield, with the iShares Core U.S. Aggregate Bond Fund (AGG), which tracks the broader bond market, rising 1.12% to its highest level since May.

On the geopolitical front, markets are still watching developments in the Middle East with caution as they await a response from Iran and its allies to Israel after the assassination of Hamas leader Ismail Haniyeh. US Secretary of State Antony Blinken has told G7 nations that the response could begin today, according to Axios, citing three of its sources. Blinken does not know the exact timing or type of attack.

Iran has also continued to threaten to retaliate and has told Arab mediators that it will respond, even if it means war, according to The Wall Street Journal. While there are no signs of any kind of calm on the horizon on various fronts, Blinken has expressed his frustration with the faltering negotiating track in Gaza, according to Axios. While reaching a ceasefire in Gaza would defuse the regional war in the entire region, Hamas has suspended negotiations until a successor to Haniyeh, the main negotiator, is appointed.

These developments sent shock waves through markets around the world, with Japan’s Nikkie 255 index falling by more than 12% in its worst daily performance since the 1980s. European indices such as the DAX and CAC 40 also fell by nearly 2% with very low sentiment in the markets.

US stocks listed on European stock exchanges also continued their sharp declines today. For example, Apple and Nvidia shares on the German Gettex exchange fell by 7.7% and 8.78%, respectively. Therefore, more violent declines for major companies may follow today.