Most Markets Continue Their Losing Streak in Anticipation of Further Interest Rate Hikes

U.S. stock futures are lower after the major averages closed out the month of August with losses. The Dow fell 0.9%, the S&P 500 shed 0.8%, and the Nasdaq contracted 0.6% yesterday. For the month, the Dow Jones and S&P 500 fell 4% while the Nasdaq Composite shed nearly 5%. The decline marked a sharp reversal from July, when the S&P 500 rose close to 10%.

On the final day of August, the Dow Jones Industrial Average slid nearly 0.9%. The S&P 500 lost about 0.8%, and the Nasdaq Composite fell roughly 0.6%. The Dow closed the month down about 4.1%, while the S&P and Nasdaq recorded losses of 4.2% and 4.6%, respectively.

On Wednesday, Cleveland Federal Reserve President Loretta Mester said she expects interest rates to rise above 4% before the central bank can start pulling back. The current fed funds rate is 2.25%-2.50. Later this morning, the Institute for Supply Management (ISM) will release its manufacturing Purchasing Managers' Index (PMI) for August. Economists expect a reading of 51.8%, just above the 50% threshold indicating manufacturers are optimistic that business conditions are improving, but down slightly from July's 52.8%.

Prices of major cryptocurrencies are falling, with the price of Bitcoin (BTCUSD) down 1% just above $19,970. The price of Ethereum (ETHUSD) is 0.7% lower, near $1,580.

European stocks are in the decline mode again, with the Europe Stoxx 600 down 1.42% as of 3:30 p.m. CET. The British FTSE 100 dipped 1.63% while the French CAC 40 Index declined 1.49%, and the German DAX fell 1.23%. The unemployment rate in the Eurozone dropped to 6.6% in July from a revised 6.7% in June, while Eurozone manufacturing PMI was revised lower to 49.6 in August from an initial reading of 49.7. The S&P Global/CIPS UK manufacturing PMI was revised higher to 47.3 in August versus a preliminary reading of 46, while French manufacturing PMI climbed to 50.6 in August from a preliminary estimate of 49. The S&P Global/BME German manufacturing PMI was, however, revised lower to 49.1 in August against a preliminary 49.8.

In Asia, stocks were lower earlier this morning, with the Shanghai Composite down 0.5% and the Hang Seng Index having shed 1.8%. In Japan, the Nikkei fell 1.5%. The Chinese metro area of Chengdu reported it would lock down its 21 million residents to contain a Covid-19 outbreak, as the country’s vast Western region that has been relatively untouched by the virus so far. The capital of Sichuan province, Chengdu will be the biggest city to shut down since Shanghai’s impact of two-month lockdown earlier this year. Meanwhile, Russia is considering a plan to buy as much as $70 billion in yuan and other currencies of its friendly nations this year to tackle the ruble’s continuing ascension. The yuan briefly extended gains against the dollar after the news.