US equities lose steam as economic, trade concerns dominate

by Andre Janse van Vuuren and Anand Krishnamoorthy

US stock futures turned lower alongside Treasuries as concerns about the American economy persist amid uncertainty over tariffs and the country’s fiscal position. Tepid demand for Japanese bonds also hurt sentiment.

S&P 500 contracts fell 0.2% after the US benchmark rallied in the previous session. Contracts for the Nasdaq 100 were little changed ahead of Nvidia Corp.’s earnings release. 

The yield on 30-year Treasuries rose three basis points to 4.98% after a 40-year auction in Japan drew the weakest demand since July. The dollar traded flat.

Investors remain wary about the economic prospects of the US following President Donald Trump’s initiation of a trade war and pursuit of deficit-raising tax cuts. The concerns have weighed on asset prices while the Federal Reserve has paused its interest rate-cutting cycle to assess further evidence. 

“Normally the US outperforms when global growth slows, because it’s got the lowest operational leverage among other things,” said Andrew Garthwaite, chief global equity strategist at UBS. “The problem this time is the slowdown in global growth is led by the US and the Fed is more reactive.”

Lackluster appetite at Wednesday’s bond sale in Japan risks fueling further volatility in global debt markets. The nation’s 30-year yield jumped 10 basis points following the auction.

“The super-long sector has shown some strength since the end of last week,” said Miki Den, a senior rates strategist at SMBC Nikko Securities in Tokyo. “Unless fundamental concerns about further yield increases—driven by supply-demand imbalances and expectations for fiscal expansion—are resolved, this is not the right timing to engage in outright purchases or flattener trades.”

Investors will focus later Wednesday on the earnings of Nvidia, the maker of chips vital to a build-out of AI infrastructure. The company’s earnings report will offer a sense of whether that flood of spending is sustainable - a day after the stock erased its losses for the year.

“If Nvidia comes out positive, and some of the hyperscalers talk about positive numbers, from a macro perspective this is constructive and the tailwind, the momentum will continue,” said Gareth Nicholson, head of discretionary portfolio management at Nomura International Wealth Management. 

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.1% as of 9:16 a.m. London time
• S&P 500 futures fell 0.2%
• Nasdaq 100 futures fell 0.1%
• Futures on the Dow Jones Industrial Average fell 0.2%
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index rose 0.1%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1323
• The Japanese yen rose 0.1% to 144.16 per dollar
• The offshore yuan was little changed at 7.1891 per dollar
• The British pound was little changed at $1.3504

Cryptocurrencies

• Bitcoin fell 0.8% to $108,793.09
• Ether fell 1.4% to $2,632

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.47%
• Germany’s 10-year yield advanced one basis point to 2.55%
• Britain’s 10-year yield advanced three basis points to 4.70%

Commodities

• Brent crude rose 0.6% to $64.48 a barrel
• Spot gold rose 0.7% to $3,323.79 an ounce

This story was produced with the assistance of Bloomberg Automation.

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