Investing.com – Wall Street futures pointed to a lower open on Tuesday as investors returned from the long weekend and opted to take profits after the previous four-day rally while watching the fallout from the U.K.’s decision to leave the European Union (EU), known as a Brexit.
The blue-chip Dow futures lost 69 points, or 0.38%, by 10:59AM GMT, or 6:59AM ET, the S&P 500 futures fell 9 points, or 0.43%, while the tech-heavy Nasdaq 100 futures traded down 20 points, or 0.45%.
U.S. stocks closed slightly higher last Friday, giving both the Dow and S&P weekly gains of 2.15% and 3.22%, respectively. That was their best weekly rise this year.
But the world’s principle stock index looked set on Tuesday to once again lose the psychological 2,100 point-level as traders decided to take a breather after last week’s strong rally.
Most eyes were on Britain as activity in its services sector registered its weakest quarterly growth in more than three years with uncertainty ahead of the EU referendum blamed as the culprit.
The Bank of England (BoE) announced new measures to combat what it considered to be a “period of heightened uncertainty” by cutting the counter-cyclical buffer on bank lending to 0% from 0.5%.
BoE governor Mark Carney explained that the move would provide greater flexibility to domestic banks to supply credit to U.K. households and firms.
Nevertheless, the British pound fell to a daily low of $1.3115 against the dollar, its weakest level since 1985, and also hit its lowest level against the euro since October 2013.
As global equities traded mostly lower in risk-off trade, investors poured into bonds with the yield on the U.S. 10-year Treasury hitting another record low at 1.378% on Tuesday.
Additionally of note in fixed income, Swiss 50-year bond yields turned negative for the first time, meaning investors were willing to pay the country for the chance to lend it money out until 2066.
Also in Europe, U.K. 10-year gilt yields dropped to an all-time low of 0.785%, while German 10-year bonds yields slumped to -0.159%.
The Japan 10-Year yield also dropped to fresh record lows.
On the economic calendar stateside, investors looked ahead to the release of May factory orders as well as a speech from New York Fed president William Dudley.
Meanwhile, oil prices were under heavy selling pressure on Tuesday, as investors fled anything considered a risky asset amid concerns over the global economy.
U.S. crude futures sank 2.39% to $47.82 by by 11:01AM GMT, or 7:01AM ET, while Brent oil traded down 2.00% to $49.10.