US Index futures flat amid US government shutdown fears
US index futures remained flat on Sunday night, following reports President Donald Trump discussed firing the head of the US Federal reserve, Jerome Powell.
Fears of a total US government shutdown and more Fed hikes have spooked traders over the weekend. IG Market Analyst, Kyle Rodda says the problem is that traders want to hear that hikes will stop.
“Looking at US Treasuries for one, there’s been a slight risk premium seemingly priced into yields after US President Trump drove the US government into shut down over the weekend.” Mr Rodda said.
President Donald Trump’s budget director and chief of staff, Mick Mulvaney told news outlets on Sunday that its possible a government shutdown could continue well into the new year.
"It's very possible this shutdown will go beyond (December) the 28th and into the new Congress," Mr Mulvaney said.
Analysts say this weighed heavy on investors, as well as other factors including concerns over US-China trade disputes and future interest rate hikes by the Fed.
US stocks plunge amid worries
The S&P 500 has suffered one of its worst months this Decemeber. As of Friday's close, the Nasdaq was down around 22 % from its record high close in late August. Analysts say The Nasdaq is now formally in a bear market, with The Dow and S&P not far behind.
IG Market Analyst Kyle Rodda, says conflict between Trump and Powell is one of the signifiant moves showing repercussions in financial markets. .
“It’s an international phenomenon and strikes at the core of international political system. It’s manifesting in Brexit, in US politics, in France’s yellow vests movement, in the trade-war – and on and on.
Financial markets take an amoral position on such subjects; however, they do manifest emotion, and right now the political climate is leading to a lift in fear.” Mr Rodda said.
Global Markets
10-year Treasury yields were at 2.79 % on Monday, and have already fallen 40 basis points in just six weeks.
The dollar index was a shade softer at 96.835.
Gold held near 6-month peaks, as the dollar eased, while oil prices were near their lowest since 2017, having shed no less than 11% last week.
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