Investing.com - U.S. stock futures pointed to sharp losses at the open on Thursday, as a meltdown on China’s stock market and a rapid depreciation of the yuan rattled investor sentiment
The blue-chip Dow futures tumbled 393 points, or 1.41%, as of 10:55 GMT, or 5:55AM ET, the S&P 500 futures slumped 49 points, or 2.43%, while the Nasdaq 100 futures dropped 141 points, or 3.15%.
On Wednesday, U.S. stocks closed at their lowest level since early October, weighed down by fresh concerns over China and slower global growth and as energy shares tumbled with oil prices.
Trading on China’s stock markets was suspended for the second time this week on Thursday, after a plunge of more than 7% after the open.
Market sentiment was hit after the People's Bank of China set its official yuan midpoint rate lower compared with Wednesday's fix. It was the largest daily drop in the midpoint rate since last August, when an unexpected almost 2% devaluation of the currency sparked a broad based selloff in markets.
The gloomy mood spilled over to European equity markets, where Germany's DAX crashed 3.5%, as another trading halt in China and sliding oil prices fueled heavy selling.
Oil prices extended this week’s rout to hit levels not seen in more than a decade, as mounting concerns over China’s economic outlook added to the view that a global supply glut may stick around for longer than anticipated.
U.S. crude fell to $32.10 a barrel, a level not seen since December 2003, before rebounding to trade at $33.13, down 84 cents or 2.46%, while Brent was last down 67 cents, or 1.94%, at $33.56, after hitting a session low of $32.17, the lowest since April 2004.
Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.4% at 98.88.
Investors kept an eye on upcoming U.S. data to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016.
The U.S. is to produce weekly data on initial jobless claims at 8:30AM ET. Also looming large is Friday's nonfarm payrolls report for December.
The minutes of the Federal Reserve’s December interest rate-raising meeting showed that some officials expressed concerns that inflation could remain at stubbornly low levels. Some members also said their decision to hike was a "close call, particularly given the uncertainty about inflation dynamics”.
The minutes assured markets that further U.S. rate hikes would be gradual.