Here are five things you must know for Tuesday, September 28:
1. -- Tech Leads Stock Futures Slump As Rates, Commodities Soar
U.S. equity futures traded lower Tuesday, with tech stocks leading the declines, as government bond yields surged alongside commodity prices amid the extended energy crunch sweeping its way across the world.
Natural Gas prices closed at a record high in Europe last night, trading more than five times the level seen in north American markets, while U.K. Prime Minister Boris Johnson has put British troop on standby as the nation remains gripped by a shortage of gasoline that has left stations without fuel for a third consecutive day.
China, as well, remains hamstrung by rolling blackouts linked to a lack of coal, higher energy prices and tougher emissions standards that has slowed industrial profits for six consecutive months.
In the U.S., a poorly-received auction of $60 billion in 2-year notes yesterday -- which drew the weakest demand levels since 2008 amid a plunge in foreign buyers -- underscored the risked linked to debt ceiling negotiations and a pending government shutdown and sent yield surging to 18-month highs in overnight trading.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average are indicating a 150 point opening bell slide, with oil and banking stocks providing pre-market support, while those linked to the S&P 500 are priced for a 40 point slump.
Nasdaq Composite futures, which are more sensitive to interest rate increases, are set for a 244 point decline as higher Treasury bond yields surge, taking benchmark 10-year Treasury notes to a January 17 high of 1.544% in overnight trading.
2. -- Global Energy Crunch Continues As China Cuts Power Use
China continued to ration power in the industrial northeast Tuesday as the nation's power crisis spilled over into Europe and boosted U.S. oil prices to the highest levels in three years.
Goldman Sachs, which slashed its China GDP forecast to 7.8% amid the crisis, said that as much as 44% of the nation's industrial activity had been affected. Other estimates put the total at 66%, lead by a 10% cut in peak power use by Guangdong province.
In Europe, colder weather heading into the autumn months, as well as unsteady imports from Russia, added to the recent surge in natural gas prices , lifting them to a record high of $26 per million British thermal units.
The energy price surges have lead to an extended rally in crude markets, as well, which are also elevated by the lowest domestic supplies since 2018 and the disruption in Gulf drilling capacity brought by Hurricane Ida.
WTI futures for November delivery traded 84 cents higher on the session at $76.29 per barrel while Brent contracts for the same month, the global pricing benchmark, were up 71 cents at $80.24 per barrel, the highest since 2018.
3. -- Fed Chair Powell Faces Senate Banking Committee
Federal Reserve Chairman Jerome Powell will tell lawmakers on Capitol Hill Tuesday that inflation pressures and hiring challenges in the world's biggest economy may be "more enduring than anticipated".
In prepared remarks for his appearance -- alongside Treasury Secretary Janet Yellen -- before the Senate Banking Committee, Powell added the central bank would "certainly respond and use our tools to ensure that inflation runs at levels that are consistent with our goal" if inflationary pressures were to persist.
His testimony, aimed at assessing the Fed's response to the coronavirus pandemic, comes not only at a time when its polices are being tested by higher inflation, but also amid an ethics row that has lead to the early retirement of two Fed Presidents linked to criticism of their trading activities during last year's market upheaval.
4. -- Ford Doubles Down on EV Investment Shift
Ford (F) - Get Ford Motor Company Report shares powered higher Tuesday after the carmaker unveiled plans to build four new U.S.-based manufacturing plants as it accelerates its transition into clean-energy vehicles.
Ford, along with its Korea-based partner SK Innovation, will invest $11.4 billion into the construction of three battery plants, as well as an assembly facility dedicated to the electric F-150, that it says will create 11,000 new jobs in Tennessee and Kentucky.
"This is a transformative moment where Ford will lead America’s transition to electric vehicles and usher in a new era of clean, carbon-neutral manufacturing,” said Ford's executive chairman Bill Ford.
Ford shares were marked 2.26% higher in pre-market trading Tuesday to indicate an opening bell price of $14.48 each, a move that would extend the stock's six-month gain to around 19.2%.
5. -- TikTok Passes 1 Billion Users
TikTok, the social media sensation owned by China-based tech group ByteDance, passed 1 billion monthly users for the first time in September, just three years after its initial launch.
The short-form video platform was the most downloaded app in the world last year, thanks to a surge in popularity during the peak of the global coronavirus pandemic, but came under intense criticism for its data collection practices and its ties to the Chinese government.
The Chinese state, in fact, holds both a 1% stake and a board seat Beijing ByteDance Technology, a group subsidiary focused on domestic audience, a move that Florida Senator Marco Rubio said made the teen-focused app "a serious threat to personal privacy and U.S. national security."