U.S. stock index futures were sharply lower Monday, after a steep global selloff in the previous week, amid worries the Federal Reserve's stimulus measures may be winding down and a possible cash crunch in China.
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Concerns about tightening central bank policy were reignited on Monday when the People's Bank of China refrained from pumping cash in to the economy, despite a liquidity squeeze. The news accelerated losses on the Shanghai Composite, which closed at a fresh 2013 low.
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Goldman Sachs became the latest bank to downgrade China's growth outlook, saying tighter financial conditions are a downside risk for the world's second largest economy. The bank cut China's gross domestic product growth forecast for the second quarter to 7.5 percent on the year, down from 7.8 percent.
Meanwhile, jitters over prospects that the Federal Reserve could start paring back on its easy-money policy later this year pushed stocks lower and Treasury yields to their highest levels in nearly two years. Last week, major averages logged their worst weekly drop since mid-April.
Furthermore, the Bank for International Settlements (BIS) waved a red flag for central banks over the weekend, saying it was time to end ultra-lose monetary policy. BIS — known as the central bank for central banks — said in its annual report that current monetary policy in the U.S., euro zone, U.K. and Japan will not bring about much-needed labor and product market reforms, and is a recipe for failure.
No major economic reports are scheduled for release Monday. Dallas Federal Reserve President Richard Fisher, a voting member of the Federal Open Market Committee next year, is expected to give a speech on U.S. monetary policy later this afternoon.
Apple stocks may be closely watched, as the technology giant announced late on Friday that it had changed the way senior executives, including CEO Tim Cook, will receive stock awards. From now on, the award size will depend on stock market performance.
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Meanwhile, U.S. crude oil prices could fall further this week, having sunk 3 percent last Thursday after Fed Chairman Ben Bernanke's news conference. A majority of analysts in a CNBC poll forecast prices would ease further this week.