US futures track lower as global stocks weaken

investmentnews.com:

European stocks fell and government bond yields climbed as inflationary fears fueled bets interest rates will stay higher for longer. China’s yuan retreated to its weakest since November after a surprise interest-rate cut. 

Europe’s Stoxx 600 lost as much as 0.6%, while US futures pointed to a drop at the open. UK gilts retreated and the pound climbed after wage growth accelerated to the strongest pace on record. Short- and long-maturity US Treasury yields rose. 

The UK data underscored investor fear that a pivot to lower interest rates in the developed world is still a long way off as traders look to the minutes of the Federal Reserve’s July policy later in the week for clues on the central bank’s next move. 

Red flags in China’s economy are also rattling markets, and the central bank’s surprise move comes after a devaluation in Argentina. Russia’s policy makers followed by hoisting the key rate 350 basis points to stem a slide in the ruble.

The Chinese currency slipped as much as 0.5% after policymakers lowered the rate on one-year loans — known as the medium-term lending facility — by 15 basis points to 2.5%. Only one of 15 economists surveyed by Bloomberg had predicted the move, which came shortly before the release of disappointing data for July showing growth in consumer spending, industrial output and investment sliding across the board and unemployment picking up.

China’s rate cut “is a positive but I suspect the support to the market from this will be subdued and short-lived,” said Redmond Wong, a market strategist at Saxo Capital Markets HK Ltd. “Investors now are worried about credit events, not just from the ailing property sector.”

Sentiment has been soured by debt concerns at Country Garden Holdings Co.,