Stock futures mark further losses on Wall Street; GameStop in Focus

The fall in stocks follows a strong start to the year that some investors say had pushed share prices beyond levels justified by corporate fundamentals. The sell-off has taken place amid volatile moves in separate stocks including GameStop and AMC Entertainment,

AMC 301.21%

motivated by a battle between day traders and hedge fund professionals.

“There’s a bit of excitement in the market,” said Olaf van den Heuvel, chief investment officer for Aegon Asset Management in the Netherlands, citing the rise in GameStop shares as one example. “It was a bubble area.”

GameStop shares fell 8.5% ahead of the New York bell, after they rocked 135% Wednesday. AMC fell 23%, trimming Wednesday’s gains of more than 300%.

The slow release of vaccines and the restrictions of Covid-19 in key economies have prompted investors to take some money off the table, Mr van den Heuvel said. He said Aegon would look at the market as an opportunity to buy risky assets when markets settle.

Technology stock fell ahead of the bell in New York. Shares of Apple fell 3.4% after the iPhone maker reported their most profitable three months but did not provide specific revenue guidance for this quarter.

Facebook,

posted net revenue but warned that uncertainty from regulatory probes and advertising boundaries could create business headlines, pre-sale trading fell 2.2%. Tesla fell 5.9% after the electric vehicle maker – whose shares have gone up in recent months – posted its first full-year profit but missed Wall Street expectations .

In one sign of a rising risk attack, yield on the 10-year U.S. Treasury benchmark note fell below 1% for the first time since Jan. 6, falling as low as 0.998%, which according to Tradeweb.

Bond yields fall as prices rise. Falling yields are often a sign that investors are seeing the economic outlook weaken.

The dollar strengthened against various currencies including the Australian dollar and the Korean won. The WSJ Dollar Index, which measures the greenback against other currency baskets, rose 0.2%.

Investors will release data on jobless claims – which will be published at 8:30 am ET and are expected to show that the number of workers seeking benefits fell last week – for new ideas on how the economy is recovering from the pandemic.

The Federal Reserve maintained its easy monetary policies Wednesday, saying business activity has slowed with the resurgence of Covid-19 cases.

“The immediate removal of fiscal stimulus could lead to a failure of recovery,” said Mairi Nicola, portfolio manager for PineBridge Investments.

Ms Nicola is bullish on the outlook for stocks in the US and elsewhere, saying vaccines will fuel further gains over the next 18 months.

“It’s hard to say that markets are overvalued, or that what is happening in markets is appalling,” when comparing stocks to the low yields on bonds, he said. i.

Sales in U.S. stocks expanded overseas. The Stoxx Europe 600 continental pan fell 2%, led lower by shares of oil-and-gas, technology and healthcare companies.

Shares in several European stocks came with a sharp contraction that burned up Wednesday, when the brief tension spread outside the U.S., under pressure. Unibail-Rodamco-Westfield commercial real estate company lost 4.7% and German drug manufacturer Evotec fell 5.5%.

Among other individual movers, Prudential fell 6.5% after the insurer said it was measuring a balance offer and would cancel its Jackson National arm in the U.S. Diageo gaining 3.4%, because analysts chew strong sales in the first half in North America by the alcohol producer. .

Markets in Asia generally declined. Hang Seng Hong Kong fell 2.6%, Shanghai Composite Index fell 1.9% and Japan’s Nikkei 225 declined 1.5%. There was a huge loss in mainland China, slipping 10% due to the Cosco Shipping giant.

As a sign of jitters in Chinese markets, money market rates continued to rise. Shanghai interbank one-week offer rate rose 0.012 percent point to 2.981%, the highest level since 2015, according to FactSet.

Short-term loan costs have gone up in the past few days as the People’s Bank of China drains money from the financial system unexpectedly. Earlier this week, a major business newspaper published comments from Ma Jun, an adviser to the central bank, who warned of emerging asset bubbles due to loose monetary policy.

Xing Zhaopeng, a Chinese market economist at ANZ in Shanghai, said outflows from Chinese markets and the central bank’s stance had boosted sales in Shanghai and Shenzhen.

“International investors are cutting the risk position due to bubble woes, including land equities and bonds,” Mr Xing said.

Tai Hui, Asia’s main market strategist at JP Morgan Asset Management, said new pockets of coronavirus uprising in China had also rejected investor comments.

Write to Joe Wallace at [email protected] and Chong Koh Ping at [email protected]