Stocks slid with US equity futures in a cautious start on Monday as investors await a slew of interest rate decisions in the days ahead and after global equities notched their worst week since hitting this year’s low in June.
Futures on the S&P 500 index dropped nearly 1 per cent along with the Nasdaq 100, indicating extended declines for the benchmark after its steepest weekly decline since June 17. The Stoxx Europe 600 Index headed for its lowest close since July 5, wiping out most of its summer rally.
“The aggressive tightening of policy in the coming 4-6 months, not just in the US but globally, increases the risk of a recession next year,” said Maria Landeborn, a senior strategist at Danske Bank A/S. “We expect uncertainty will remain high surrounding inflation, rates and the overall economy, which is negative for market sentiment and risk assets.”
Traders briefly priced the Fed’s key policy rate peaking at 4.5 per cent in March last week as the central bank escalates its effort to contain inflation. That expected peak was up by a full percentage point since the Fed’s last policy meeting in July.
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