U.S. equity futures opened lower on Sunday, following coordinated attacks in Paris on Friday that killed more than 130 people.
The attacks unfolded after markets closed in the United States, but equity futures added to losses in light volume in after-hours Friday trading after reports hit the news and images were shared on social media.
Analysts expected a so-called run to safety as a knee-jerk reaction to the uncertainty caused by the attacks, and the slide in equity futures partly confirmed expectations.
Stock indexes on Wall Street logged their largest weekly losses since August on Friday before the news out of Paris, on the back of weak economic data and following six weeks of gains on the S&P 500.
“The market was already weak prior to Paris, (this) will reinforce the defensive rotation that was already starting,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
“You will notice the Utilities were the only sector to close higher last week,” he said.
Amid the expectation of an escalation in attacks from the United States and its allies against Islamic State, who claimed responsibility for the attacks in Paris as well as twin bombings in Beirut on Thursday, there was focus on the stocks of weapons manufacturers and others in the defense sector.
“Defense company stocks in the U.S. did have a very good first half of the year but got pulled into the global selloff in August, said Nicholas Colas, chief market strategist at the ConvergEx Group in New York.
“They are still doing better than the market as a whole,” he said. “The prospect of more military action in Syria may help this group in the week ahead.”
Other analysts called for patience to avoid being whipsawed by likely volatile markets.
“The market moves can be short and mixed,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
“It doesn’t pay to react in an emotional way.”
The New York Stock Exchange and Nasdaq said on Sunday they would observe a minute of silence at 9:25 a.m. (1425 GMT) on Monday to honor the victims of the attacks.
Futures snapshot at 18:40 EST (2340 GMT):
* S&P 500 e-minis ESc1 were down 12 points, or 0.59 percent, with 32,350 contracts changing hands.
* Nasdaq 100 e-minis NQc1 were down 31.25 points, or 0.69 percent, in volume of 4,050 contracts.
* Dow e-minis 1YMc1 were down 98 points, or 0.57 percent, with 4,335 contracts changing hands.
Source: Reuters
