S&P 500 futures are losing ground in premarket trading as global markets are under pressure after China’s developer Evergrande did not pay $83.5 million in interest on its dollar bond. According to recent reports, the company has not contacted its bondholders.
There is still an opportunity to avoid default as Evergrande has a 30-day grace period to make a payment, but fears of financial contagion are rising once again.
It should be noted that the previous two trading sessions have been very successful for S&P 500, so some profit-taking ahead of the weekend looks normal.
Today, traders will also have a chance to take a look at New Home Sales report for August which is expected to show that New Home Sales grew by 0.5% month-over-month in August. It remains to be seen whether this report will have an impact on market dynamics or traders will stay focused on Evergrande problems and the outlook for Fed’s asset purchase program.
Treasury Yields Test Multi-Week Highs
The yield of 10-year Treasuries has recently managed to settle above the key resistance level near 1.38% and made an attempt to settle above 1.45%. Traders sold Treasuries, pushing their yields higher, as Fed’s commentary at the recent meeting was a bit more hawkish than expected.
Interestingly, bond traders took their time to evaluate the Fed meeting, and the reaction of the bond market has been delayed. However, yields have managed to get above the key resistance level and have a good chance to develop additional upside momentum. Higher yields may put more pressure on tech stocks and serve as a bearish catalyst for the general market.
WTI Oil Tries To Settle Above $73.50
WTI oil has recently made an attempt to settle above $73.50 as traders continued to push oil prices higher on fears about supply disruptions. Recent crude inventories reports, which indicated that crude inventories continued to decline at a robust pace, served as an additional bullish catalyst for the oil market.
Many notable oil-related stocks are trading near major resistance levels, and it remains to be seen whether traders will be ready to push these stocks above those levels ahead of the weekend.