Stock exchange traded funds were set to open sharply lower in the U.S. on Thursday as investors fretted over weakness in the global economy and European banks’ exposure to the region’s debt crisis.
SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) slipped about 2% in premarket trading as Dow futures were off 200 points before the opening bell.
In precious metals ETFs, SPDR Gold Shares (NYSEArca: GLD) added 1.2% and gold prices climbed back above $1,800 in the flight-to-safety trade.
ETFs tracking European stocks were set for a drubbing on Thursday. Among single-country funds, iShares MSCI Germany (NYSEArca: EWG) fell nearly 4% in premarket dealings. In Europe, Italy’s FTSE MIB plunged 4% while France’s CAC 40 fell nearly 3%.
U.S. Treasury yields declined Thursday as investors flocked to bonds – iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) climbed 1.4% before the bell.
In volatility-linked ETFs, iPath S&P VIX Short Term Futures (NYSEArca: VXX) rose 6%.
Morgan Stanley cut its global economic forecasts for 2011 and 2012.
“We still have a lot of questions on the economy,” Guillaume Duchesne, an equity strategist at BGL BNP Paribas, told Bloomberg. “Markets are worried and stocks linked to the economy are strongly penalized.”