US equity futures fell, and European stocks opened lower, as concern that high inflation is cutting into corporate performance overshadowed bargain hunting of beaten-down stocks.

Futures on the S&P 500 Index slid 0.4% after the equity benchmark posted the biggest single-day drop since June 2020 on Wednesday. Nasdaq 100 contracts were down 0.5%. The Stoxx 600 retreated more than 1% as Europe’s technology shares joined a global selloff. Oil rebounded after a two-day drop. The dollar was steady, while Treasuries posted modest gains.

Bets that robust earnings can help investors weather this year’s turbulence were cast in doubt after US consumer titans signaled growing impact of high inflation on margins and consumer spending. Meanwhile, Federal Reserve officials reaffirmed that tighter monetary policy lies ahead, and investors fretted over stagflation risks.

“We are pricing in a growth scare,” Lori Calvasina, the head of US equity strategy at RBC Capital Markets, told Bloomberg TV. “There’s a lot of uncertainty in this market right now about whether or not that recession is going to come through or if it’s going to be another near-death experience.”

Stocks of retailers and consumer-discretionary companies posted some of the biggest losses in Asia and Europe after US investors questioned the lofty valuations of companies like Target Corp. in the backdrop of rising interest rates.

In China, Tencent Holdings Ltd. plunged 6.6 after warning it will take time for Beijing to act on promises to prop up the Chinese tech sector. Cisco Systems Inc. slid in extended US trading on a disappointing revenue outlook.

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 fell 1.2% as of 8:14 am London time
  • Futures on the S&P 500 fell 0.4%
  • Futures on the Nasdaq 100 fell 0.5%
  • Futures on the Dow Jones Industrial Average fell 0.4%
  • The MSCI Asia Pacific Index fell 1.9%
  • The MSCI Emerging Markets Index fell 2.1%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $ 1,046
  • The Japanese yen fell 0.1% to 128.37 per dollar
  • The offshore yuan was slightly changed at 6.7830 per dollar
  • The British pound was slightly changed at $ 1.2344

Bonds

  • The yield on 10-year Treasuries declined two basis points to 2.87%
  • Germany’s 10-year yield declined four basis points to 0.99%
  • Britain’s 10-year yield declined four basis points to 1.83%

Commodities

  • Brent crude rose 1.3% to $ 110.49 a barrel
  • Spot gold fell 0.1% to $ 1,813.89 per ounce

© 2022 Bloomberg



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