Fed’s Policy Tightening Starting to Impact U.S. Housing Market

Stock index futures pointed to a higher open today, but trading is likely to be volatile amid low volume and light news agenda. Nasdaq Composite futures are 0.62% higher at the time of writing, while S&P futures and Dow Jones futures are also up, nearly half of the former’s uptick.

The action follows a broad sell-off during the regular session Wednesday as recession fears weighed on investor sentiment in a losing week, month and year. The Dow Jones Industrial Average lost 1.1%. The S&P 500 fell 1.2%, while the Nasdaq Composite dropped 1.35%.

The major averages are headed toward their worst year since the financial crisis hit 2008. The Dow has lost 9.5%, while the S&P 500 shed 20.6%. Meanwhile, the Nasdaq was the worst performer, down 34.7% as investors dumped highly leveraged growth stocks.

On the macro side, weekly jobless claims in the U.S. will see the light before the opening bell. The consensus is for a rise to 225K, although the numbers are subject to a lot of seasonality this time of year. Meanwhile, Fed’s policy tightening is starting to impact the U.S. housing market. Latest data by the National Association of Realtors on U.S. pending home sales showed a sixth consecutive decline in November amid skyrocketing borrowing costs. Pending Home Sales Index data based on signed contracts dropped 4% to 73.9 in November from October's downward revision of 77.0. This is another likely indication that the stringent Fed policies are beginning to affect the housing market.

Elsewhere, in Europe, major stock benchmarks kicked off its second remaining trading session of the year in negative territory, dragged by worsening sentiment from China.

As of 2 p.m. CET, the German DAX is edging higher 0.26%, while the British FTSE 100 declined 0.21%, but the French CAC 40 is also in the green by 0.14%. The Pan European Stoxx 600 index remains virtually unchanged at the same time.

Most major stock market indexes in Asia traded lower earlier this morning following the decisions of the U.S. and some European countries to introduce testing requirements for visitors arriving from China. Italy previously announced the same measures, stating that almost half of travelers arriving in Milano tested positive for Covid-19, with other western nations reported to soon follow suit.

Japan's Nikkei 225 was down by 0.94% at the closing bell. On the Chinese mainland, the Shanghai Composite lost 0.44% concurrently, with the Shenzhen Composite having ended 0.13% lower. Hong Kong's Hang Seng decreased by 0.79% at the close. At the same time, South Korea's Kospi Composite plunged more significantly by 1.93%, The Australian S&P/ASX 200 lost 0.94% at the close.