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A worldwide stock selloff fuelled by fears about the American economy abated, with US share futures indicating small gains for Wall Street. Bitcoin was set to end a five-day losing streak. S&P 500 contracts rose 0.4% after the benchmark index plummeted the most this year on Monday. Those on the Nasdaq 100 climbed following the gauge’s worst drop since 2022. Europe’s Stoxx 600 index remained stable. Asian equities rebounded from an intraday five-week low. Subscribe to the Bloomberg Daybreak podcast on iTunes, Spotify, or anywhere you listen. The euro rose 0.6% on hopes that German legislators will reach a deal on defense expenditure. The value of the dollar decreased. Yields on policy sensitive two-year Treasuries fell to their lowest level since October.
The tone in markets remains tense, with Wall Street investors tempering their positive views owing to fears that tariffs and government expenditure cuts may harm US GDP. There is also a growing belief that President Donald Trump would not interfere to boost the market, while the Federal Reserve has suggested that it is not in a hurry to change interest-rate policy.
“In the short term, it remains difficult to advocate buying dips, as the bear case weighs more heavily,” said Michael Brown, senior research analyst at Pepperstone. “Growth expectations continue to slide, dragging earnings expectations lower alongside, all the while policy uncertainty clouds the outlook, and as a ‘Fed put’ remains about as elusive as one from the White House.”
The S&P 500 fell 2.7% in the United States on Monday. The Nasdaq 100 declined 3.8%. In the megacap market, Tesla Inc. fell 15%, while Nvidia Corp. dragged a highly watched chipmaker index to its lowest level since April. Around ten high-quality corporations postponed US bond sales. Citigroup Inc. strategists cut US stocks to neutral from overweight while upgrading China to overweight, stating that US exceptionalism is at least on hold. Citi upgraded China to overweight as the market is appealing despite a recent rebound.
Earlier, HSBC analysts increased their recommendation on European shares, excluding the UK, to overweight from underweight, citing the eurozone’s fiscal stimulus as “a potential game changer.” Get the Markets Daily newsletter to find out what’s going on with stocks, bonds, currencies, and commodities.
Investors have increased their hedges by shorting futures and options, which frequently exacerbates selling, according to Rajeev De Mello, a global macro portfolio manager at Gama Asset Management. Despite Monday’s rise, De Mello said he remains cautious. “I remain cautious as investor sentiment has turned increasingly risk-averse,” he told analysts. Bitcoin rallied 1.9% after falling as much as 3.4%. Oil stabilized following a dip, but gold increased.
