Azernews.Az

By Bloomberg

U.S. equity-index futures lurched lower on elevated volume as investors struggled to pinpoint a trigger for the selling.

E-mini futures on the Standard & Poor’s 500 Index expiring in June slumped as much as 1.3 percent, before paring losses to 0.6 percent as of 2:01 p.m. in Tokyo. Selling increased after the contract slid below its average price over the past 100 days, with volume about three times higher than the five-day average for this time of the day. Futures on the Dow Jones Industrial Average lost 0.6 percent.

“I can’t point my fingers to anything that would have triggered this,” said Nader Naeimi, who helps manage about $118 billion as Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd. “I guess that’s how big corrections often start. The fundamental reason will emerge later.”

With Alcoa Inc. starting the earnings season next week and the government’s monthly jobs report due on Friday, investors are weighing U.S. equity positions within global portfolios. Naeimi said he’s moved more of his fund into cash and expects equity volatility to rise as money managers assess data to gauge the timing of the Federal Reserve’s first interest-rate increase.

The greenback weakened against major currencies on Wednesday, with the Bloomberg Dollar Spot Index losing 0.2 percent. Most Asian stocks slid, led by Japan, after the nation’s Tankan survey of sentiment among large manufacturers missed estimates. Chinese equities advanced as government data showed manufacturing unexpectedly expanding.

“There’s no macro news that is driving futures lower,” Evan Lucas, a market strategist in Melbourne at IG Ltd., said by phone.

Trading Patterns

E-mini futures opened 0.1 percent lower Wednesday at 2,058 and meandered within a four-point range for the first two hours of trading. After 9 a.m. Tokyo time, the contracts began tracking steadily lower, before losses snowballed at 9:55 a.m. with a 11.75-point slump in two minutes. More than 13,500 contracts changed hands in that span.

While volume is high for this time of day, it remains low compared with the typical pattern in European and U.S. hours. More than 94,000 contracts have traded, compared with almost 1.6 million for the full day Tuesday.

The S&P 500 fell 0.9 percent on Tuesday in New York, trimming a ninth quarterly advance in a market that has tripled since 2009. The index’s 0.4 percent three-month gain trailed most developed markets, with Europe’s benchmark gauge surging 16 percent and Japan’s Topix index climbing 9.6 percent.

“We’re still not at a stage where we’ve entered a large- scale sell-off, but the lack of clarity over the rate hike timing is weighing on U.S. stocks,” said Norihito Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “At the moment, hedge funds that have piled up their positions appear to be taking profit through futures.”