- S&P 500 Futures take a U-turn from 15-week top, register 0.20% drop to 3,221.
- US 10-year Treasury yields drop three basis points (bps) to 0.854%.
- Headlines from North Korea, Libya and China seem to weigh on the risk-tone.
Differing from the week-start risk-on sentiment, S&P 500 Futures drop 0.20% to 3,221 amid the Asian session on Tuesday. Also portraying the cautious trading sentiment could be the US 10-year Treasury yields that drop three basis points to 0.854% as we write.
In doing so, the S&P 500 Futures fails to follow Wall Street’s upbeat performance, with over 1.0% gains, whereas the US bond yields also step back from their run-up to 0.90%.
Although no major data or announcements have taken place from the key Asian economies so far, escalating geopolitical tensions in Korea, Libya and China seem to have triggered the recent swing in S&P 500 Futures and the US treasury yields.
North Korea announced to cut all communication ties with South Korea whereas Libya halted oil production as armed forces entered el sharara oilfield. Further, China advises citizens to avoid traveling to Australia in the latest anti-Aussie move while citing widespread racism in the Pacific nation. Elsewhere, the US policymakers are inching closer to a bill to sanction Chinese diplomats involved in Xinjiang human rights violations. It should also be noted that the US Democrats U-turn on further stimulus, as cited by the Financial Times (FT), also negatively affects the market’s risk-tone.
Having said that, the global markets are likely preparing for Thursday’s US Federal Reserve meeting amid a light calendar. Though, any more risk aversion might help the US dollar to extend pullback from the 13-week low.
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