Stock futures plummet ahead of Fed meeting; Evergrande debt crisis in focus

Wall Street

Wall Street poised to open sharply lower

U.S. stock futures were sharply lower early Monday, as market participants awaited the start of a key meeting of Federal Reserve officials, which might offer more clues on the timing of the central bank’s plan to eventually scale back its pace of asset purchases.

As of 5:20 a.m. ET, futures tied to the Dow Jones Industrial Average plunged 506 points or 1.47% to 33,956.

S&P 500 futures lost 55.25 points, or 1.25% to 4,366.50 while the tech-dominated Nasdaq 100 futures shed 164 points, or 1.07% to 15,162.

The Federal Open Market Committee’s (FOMC) monetary policy meeting kicks off on Tuesday, with Fed Chairman Jerome Powell scheduled to hold a press conference at the conclusion of the meeting on Wednesday.

Last month, Powell said at the annual Jackson Hole symposium that he believes a move to “taper” or reduce the central bank’s huge pandemic-era stimulus program before year-end could be “appropriate” if the economy continues to rebound as expected.

Evergrande debt troubles weigh on Hong Kong stock market

Meanwhile, Hong Kong’s Hang Seng index dipped Monday amid worries of a possible collapse of troubled property developer China Evergrande Group (OTC: EGRNF).

Shares of Evergrande led the losses, sliding 14.6% to HK$2.17 ($0.28) on fears that the company could default on its massive debt pile of $300 billion.

Evergrande, China’s second-biggest property company, has interest payments on two bonds due on Thursday and its financial woes have sparked memories of the collapse of investment bank Lehman Brothers in 2008.

As per Reuters, Evergrande employs 200,000 people, has more than 1,300 developments, and generated sales of more than $110 billion last year.

At the time of writing, the Hang Seng index was down 3.3% after ending a four-day losing streak to finish with gains of more than 1% on Friday.

Crude futures sink on rising U.S. dollar and global sell-off

In energy markets, crude futures were also trading in the red this morning as a rising dollar pressured traders, who had piled into commodities to shield against inflation, to exit to other sectors.

Uncertainty over the Federal Reserve’s tapering decision and a global sell-off prompted by China’s embattled Evergrande also weighed on crude.

As of 5:20 a.m. ET, U.S. West Texas Intermediate (WTI) crude futures were down $1.38, or 1.92% to $70.44 a barrel. Global Brent crude futures fell $1.18, or 1.57% to $74.16 a barrel.