S&P 500 Futures drop half a percent amid Delta variant concerns

• S&P 500 Futures extend three-day downtrend to one-week low.
• Virus woes weigh on sentiment, indecision over Fed’s next move, Sino-American tussles add to the risk-off mood.
• Risk catalysts keep the driver’s seat amid light calendar.

S&P 500 Futures stay heavy for the third consecutive day, down 0.48% around 4,298, amid early Monday. The risk barometer bears the burden of the market’s downbeat sentiment amid the coronavirus Delta variant woes and doubts over the US Federal Reserve’s (Fed) action amid a quiet session. Also roiling the mood could be the fresh headlines suggesting the US-China tension.

Australia’s Sydney is up for extending the virus-led lockdowns beyond the Tuesday-night deadline even as the nation’s daily infections ease for the second consecutive day after refreshing the 10-month high on Friday. On the same line, the UK’s “Freedom Day” gains heavy criticism from Britain’s opposition parties as the nation registers the highest covid infections since early January. The UK’s newly appointed Health Minister Sajid Javid also tested positive for the virus, following that UK PM Boris Johnson chose to isolate himself.

Elsewhere, Friday’s US consumer-centric data came in mixed but the details kept the reflation fears on the table. The same strengthened concerns that the Fed remains on the path to monetary policy adjustments despite multiple rejections from the policymakers.

On a different page, the Sino-American tussles also escalate as the US toughens the stand against the dragon nation of multiple issues ranging from human rights to trade. While giving the update over the same, Bloomberg recently said, “US Congress is aiming to hobble China’s ability to recruit scientists and academics in the U.S. as part of broader moves in Washington to confront the Asian nation’s growing clout.”

Amid these plays, stocks in Asia-Pacific remain offered while the US 10-year Treasury yield drops 2.2 basis points (bps) to 1.27% by the press time.

Looking forward, risk appetite may remain pressured as the variant challenges the economic recovery from the pandemic and fears spreading faster, not to forget its vaccine resistance. Also, the Fed is in no mood to respect market expectations and offers additional burden on the sentiment amid a light calendar.

Read: Forex Today: Risk-off to continue leading the way