US futures rebound after Dow plunges below 30,000 as central banks spark recession fears

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  • US futures rebounded Friday after a sharp sell-off on Wall Street saw the Dow plunge below 30,000.
  • Interest rate hikes from three major central banks this week have added to fears that a recession may be looming.
  • Asian stocks followed Wall Street lower overnight, while oil prices and the dollar rose.

US futures rallied Friday after a brutal sell-off the day before sent the Dow Jones below 30,000 for the first time early 2021, as central banks’ rate hikes sparked fears about a global recession .

Dow Jones futures were up 0.85% as of 5.05 a.m. ET, as investors looked to finish the week on a brighter note. S&P 500 futures were up 0.97%, while Nasdaq 100 futures were 1.12% higher.

Elsewhere in markets, European stocks also attempted a recovery, but Asian shares followed Wall Street sharply lower overnight. Oil prices rose slightly, as did the dollar and cryptocurrencies.

Global stocks have tumbled this week, as some of the world’s biggest central banks have raised interest rates as they try to cool down inflation. The MSCI All-World index has now wiped out all the gains of the past 18 months.

The Fed hiked interest rates by 75 basis points Wednesday, in the biggest increase since 1994. The Swiss National Bank then unexpectedly hiked rates by 50 basis points Thursday, with the Bank of England hiking by 25 basis points the same day.

That triggered a dramatic sell-off on Thursday, which saw the Dow drop 2.42% to 29,937, the S&P 500 shed 3.25% and the tech-heavy Nasdaq Composite drop 4.08%. Stocks in Europe also tumbled, with the continent-wide Stoxx 600 down 2.5%.

“The more aggressive line by central banks adds to headwinds for both economic growth and equities,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “The risks of a recession are rising, while achieving a soft landing for the US economy appears increasingly challenging.”

Weak US economic data added to the concerns, with housing starts falling sharply in May and jobless claims rising.

The Stoxx 600 attempted a rebound Friday, rising 1.15% in early trading. London’s FTSE 100 was up 0.77% after falling more than 3% the previous day.

In Asia, stocks fell sharply overnight. Tokyo’s Nikkei 225 dropped 1.77% and Australia’s S&P/ASX 200 fell 1.76%. China’s CSI 300 rose 1.39%, however.

Oil prices rose Friday, with Brent crude up 0.84% to $120.84 a barrel and WTI crude 0.96% higher at $118.72 a barrel. Prices have jumped around 50% this year, largely as a result of Russia’s invasion of Ukraine.

US bond yields rose slightly after dipping on Thursday. The yield on the 10-year US Treasury note was up 3 basis points to 3.23%, down from the 11-year high above 3.42% hit earlier this week. Meanwhile the dollar index rose 0.57% to 104.23.

Stocks were set to finish the week deeply in the red, with the Dow Jones down almost 5% since Monday and the S&P 500 down 6%.

“For the moment, the mood is clear. Investors globally are questioning whether any global growth is possible amid the current monetary shackles and are giving risk assets a wide berth at the slightest excuse,” said Richard Hunter, head of markets at trading platform Interactive Investor.

Cryptocurrencies edged up along with US futures after a sharp sell-off this week. Bitcoin was 1.77% higher at $21,044, according to Bloomberg prices.

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