U.S. stock futures were falling early on Tuesday following a selloff in the previous session amid eroding investor risk appetite to start the month of December, historically a strong period for markets.
Futures for the Dow Jones Industrial Average fell 40 points, or 0.1%, after the index tumbled 427 points on Monday to finish at 47,289. S&P 500 futures lost 0.1% with contracts tracking the tech-heavy Nasdaq Composite down 0.1%.
Stocks dropped on Monday as risk sentiment weakened across markets, characterized by a deep selloff in Bitcoin and other cryptocurrencies. The possibility of an interest-rate hike in Japan—which could shift significant Japanese investments abroad—saw U.S Treasury yields spike, contributing to the selloff in equities.
“U.S. futures are fairly flat, indicating that the sell-off has paused for now,” said Jim Reid, a strategist at Deutsche Bank, in a Tuesday note. “Markets got December off to a rocky start yesterday, with bonds and equities losing ground, alongside a sharp slump in Bitcoin.”
There was little sign of a rebound on Tuesday with few obvious catalysts for U.S. markets in the day ahead. Broadly, investors continue to watch the economic backdrop amid expectations that the Federal Reserve will cut interest rates following the central bank’s monetary policy meeting next week.
Investors may be watching the geopolitical situation, namely the prospect of peace in Ukraine—which has a bearing on oil markets and thus inflation, if an end to the conflict brings lower crude prices globally.
“We’ll see some focus on geopolitics as Trump’s envoy Witkoff is due to meet Russia’s President Putin in Moscow to discuss U.S. proposals to end the war in Ukraine,” said Reid.