Global stocks decline with US futures; bonds advance

Bloomberg

Stocks dropped globally along with American futures while credit markets sagged after the coronavirus death toll surged and US Congress failed to agree on a $2 trillion stimulus plan. Government bonds rose.
S&P 500 and Nasdaq 100 futures dropped to their daily limits in early trading before trimming those declines as the session progressed. The Stoxx Europe 600 slumped, led by healthcare shares as the continent’s leaders scrambled to enforce more curbs on people’s movements and Italy began shutting most industrial production. Equities fell across most of Asia, where India’s benchmark plunged a record 13% while the rupee sank to the lowest ever amid moves to lock down widespread areas of the second-most populous country.
Bloomberg’s dollar index reversed an earlier drop even as the Fed and counterparts beefed up operations to ease access
to the greenback worldwide. Treasuries gained while Brent crude extended losses after its 20% decline last week. Core European bonds climbed.
Investors are beginning another dramatic week, digesting slashed economic forecasts and the struggles of European countries to curb the pandemic, with 2,000 deaths over the weekend in Italy and Spain alone.
Warnings about the pandemic crippling the world’s biggest economy and triggering a global recession are growing as cities from New York to Los Angeles all but shut down and cases rise rapidly.
“As difficult as it is to sit in cash, that’s certainly what I’m doing,” Brian Quartarolo, portfolio manager at Pilgrim Partners Asia, told Bloomberg TV. “I’m presently in New York, and the fear is palpable — it’s rising and there doesn’t seem to be anyone who thinks that this virus effect is anywhere near peaking yet, particularly here in the States.”
The main American political parties failed to agree on a jolt to the sinking economy with a $2 trillion stimulus. Morgan Stanley warned the epidemic could cause GDP to shrink a record 30% in the second quarter. Federal Bank of St Louis President James Bullard said the jobless rate may hit 30% and growth could even halve to $2.5 trillion during the three-month period.
Meanwhile, international air carriers continued to announce drastic measures to cope with the outbreak, with Singapore Airlines Ltd among the latest to slash flights, and jet maker Airbus SE withdrawing its earnings guidance.
Elsewhere, New Zealand’s dollar fell with the country’s bond yields after its central bank joined other countries in saying it will start buying bonds to stimulate the economy.
Futures on the S&P 500 Index fell 2.8% in London. The Stoxx Europe 600 Index dipped 4%. The MSCI Asia Pacific Index decreased 3.2%.
The Bloomberg Dollar Spot Index increased 0.3%. The euro fell 0.1% to $1.0682. The British pound declined 0.9% to $1.1521. The Japanese yen climbed 0.2% to 110.70 per dollar. The yield on 10-year Treasuries fell four basis points to 0.81%. Germany’s 10-year yield decreased five basis points to -0.37%. Britain’s 10-year yield dipped six basis points to 0.504%.
West Texas Intermediate crude decreased 1.8% to $22.23 a barrel. Gold fell 0.4% to $1,492.80 an ounce.