Futures on the S&P 500 Index remained mostly unchanged on Monday. On the other hand, Nasdaq futures tumbled down by 0.8%. The MSCI Asia Pacific Index also dropped by 0.3%, while the MSCI Emerging Market Index plummeted down by 0.5%.
However, the Stoxx Europe 600 Index surged forward by 1.5%. European stocks gained as analysts considered the market relatively resilient to the tech-led downdraft in the United States. Nonetheless, the pound declined due to worries that the U.K. is coming closer to a no-deal Brexit.
The Europe Stoxx 600 amassed broad gains across industry groups on Monday. Meanwhile, Oil plunged due to a price reduction by Saudi Arabia. Treasury yields changed insignificantly, but Gold tumbled down.
American shares may lose more when markets re-open on Tuesday after the Labor Day holiday. Valuation is becoming another concerning point for U.S. investors in addition to extreme positions in technology stocks.
Since June last week, global equities plummeted down to their lowest level as investors doubted whether valuations are reaching extremes and equities have risen too quickly.
U.S. technology shares have seen a powerful rally during the pandemic. However, they showed signs of a downturn at the end of the week. After news that the Japanese conglomerate made massive bets on tech-linked options trades, SoftBank Group Corp. has declined by 7%.
Will the situation worsen on the stock markets?
Robert Greil, the chief strategist at Merck Finck Privatbankiers AG in Munich, stated that he doesn’t consider the current situation as a start of a downturn in asset prices. The global economy is in only the first phase of recovery, and a major downturn is unlikely. However, setbacks are buying opportunities in such an environment.
Meanwhile, the prospects of a trade accord between Britain and the European Union looks increasingly remote. Analysts speculate that U.K. Prime Minister Boris Johnson may tell the EU on Monday that he’s willing to walk away rather than compromise on what he sees as the core principles of Brexit.