The final trading day of a rollercoaster week has U.S. equity futures pointing to a higher open, a day after the Dow Jones Industrial Average posted its second largest one-day loss and it along with the S&P 500 moved into correction territory.
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The Dow fell 4.15% to 23,860, a loss of 1,032 points.
As of 5:30 am ET, Dow futures were higher by 147 points or 0.60 percent to 24,114. S&P 500 futures pointed 20 points higher or 0.76 percent to 2,613 while Nasdaq futures rose by 55 points or 0.87 percent to 6,373.
The Dow has dropped roughly 2,700 points since last Friday. Positive economic factors such as low unemployment has investors thinking that the Federal Reserve will keep raising interest rates.
Asian markets followed the U.S. session with more losses. China’s Shanghai Composite losing 6 percent.
“The question for many is how much further the US can fall and to what extent global markets can de-couple from the fallout,” says Michael Ingram, Chief market strategist at wealth manager WHIreland. “The answer to both may be as much about market psychology as it is about market fundamentals, though I’m heartened to see at least partial protection from the US epicentre.”
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In Europe, London’s FTSE dropped to a 10-month low and Germany’s DAX joined the Dow and S&P in correction territory.
“We are not seeing an overly aggressive follow through on to European equity markets so far today, however a second Us government shut down in the space of a month will not help sentiment,” said James Hughes, Chief Market Analyst at AxiTrader. “The deadline passed at midnight, which was followed by the senate passing their version of the bill. The house will now vote on this this morning.”
Hughes says the US dollar index has jumped back above the 90 level again and yields managed to stay at their higher levels. “This leaves a situation that despite the large numbers posted, and the recovery earlier in the week we are still looking at the stock markets positing more of a retreat after an enormous rally, this still looks like correction territory to me,” Hughes added.
