Stock futures point to sharp losses for Wall Street

Shares in Energy Transfer Equity LP (N:ETE) plunged more than 41% to 4.10.

Chesapeake Energy (NYSE:CHK) lost around two-fifths of its value as reported circulated on Friday that the plummeting oil price had prompted the company to look at restructuring its debt, as it might struggle to keep up the payments if the price of cruise remains in the slough of despond. The worst performer was Williams Companies Inc (N:WMB), which plummeted almost 35%, amid increased speculation that a proposed merger with Energy Transfer Equity could collapse. U.S. treasuries were also rallying, and so their yields fell. Earlier, spot gold topped $1,200.

But Riyadh last Thursday lowered its crude price for Asian and European countries – a signal that it will keep its oil output unchanged to defend market share.

Traders said that stocks had been oversold during the day, affording investors an opportunity to step back in late in the day. Investors have been searching for a catalyst that might change the market’s course.

Markets are in a state of confusion following a mixed U.S.jobs report Friday.

Colin Cieszynski, chief market strategist at CMC Markets, said stocks falling below their January 20 lows “could indicate if we are really heading into a big bear market or nearing the end of a big correction within a bull market”. Financials were hit the hardest amid worries of widening credit default swaps spreads, while lower oil prices hit energy and materials shares.

“Is the market throwing out the baby with the bath water?” said James Meyer, chief investment officer at Tower Bridge Advisors, referring to the “rapid fall in prices for the highflying tech and biotech names that have been leading the market for the past 12 months”. A proxy for junk, the $US13.7 billion iShares iBoxx USD High Yield Corporate Bond exchange-traded fund, lost 1.2 per cent.

Things are even bleaker for the technology-heavy index Nasdaq, which tumbled 2.3% and is on track to close at its lowest level since at least October 2014.

“A lot of emerging market economies have revenues dependent on oil and commodities and debt denominated in USA dollars-that mix has proven pretty toxic”, he added.

Wall Street was deep in the red in volatile trading on Monday, as technology stocks continued to sell off and oil prices remained under pressure, sending investors scurrying to safe-haven assets.

Financial shares sank on worries over the US economy and uncertainty whether the US Federal Reserve will raise rates this year. The sell-off in bank stocks dragged down the major indices overall, as the Stoxx Europe 600, France CAC 40 and Germany Dax all fell by more than 3% on Monday, pushing the overall indices to their lowest levels in 16 months.