Futures Recover From Overnight Lows As Market Sentiment Remains Shaky

After three tumultuous days of intense fluctuations, futures are steady ahead of Thursday's opening, recovering from overnight losses but still below the crucial CTA level of 5255, which could trigger billions in sales by systematic funds. Asian and European stocks have seen a decline, extending the heightened volatility that has shaken global markets for several days. This comes after the Bank of Japan (BOJ) unexpectedly raised rates last week, only to reverse its decision a few days later when the Nikkei experienced its largest one-day crash since Black Monday.

Market Snapshot

As of 7:4am, S&P futures remained unchanged at 5,228 while Nasdaq futures were slightly in the green, with Mag7 and semis providing support despite continued selling by Supermicro. Treasury yields are lower ahead of US jobless claims data, with US 10-year yields falling 2bps to 3.93% as European bonds also gain. The USD is weaker and commodities are lower across all three complexes as WTI dips below $75, but precious metals are seeing a bid.

Notable Premarket Movers

In premarket trading, Warner Bros shares plummeted after the parent of CNN and TNT reported a $9.1 billion charge write-down on the value of its traditional TV networks. Monster Beverage shares also slid after the energy-drink maker missed second-quarter profit estimates. Other notable premarket movers include Amneal, Bumble, Dutch Bros, Lilly, JFrog, Klaviyo, Monster Beverage, SolarEdge, and Under Armour.

Market Volatility and Economic Outlook

Markets have been extremely volatile since poor jobs data last week fueled concerns that Federal Reserve policy is risking a deeper slowdown. Coupled with a rate hike by the BOJ, the carry trade has suffered a historic unwind which, according to JPM, is about 75% done. Thursday’s US jobless claims figures are in sharper focus than ever after last week’s weak payrolls numbers. Investors are also bracing for the US and Japanese central banks to potentially move interest rates in opposite directions in the coming months, putting further strain on the yen-funded carry trade.

Analysts' Opinions

Kerry Goh, chief investment officer at Kamet Capital Partners Pte, said, “Investors probably will stay sidelined until new data appear. The next couple of days will be crucial — either calm returns, or we see a new bout of volatility emerge.” Meanwhile, both Goldman and JPMorgan raised their recession odds, from 10% to 25% and from 25% to 35%, respectively.

Bottom Line

The global market continues to experience significant volatility, with investors and analysts closely monitoring economic indicators and the actions of central banks. As the market navigates through this period of uncertainty, it's crucial for investors to stay informed and make informed decisions. What are your thoughts on the current market situation? Do you think the market will stabilize soon or will the volatility continue? Share this article with your friends and discuss these important issues. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.