European stocks decline to three-week low, dollar rises

Bloomberg

European stocks sank to a three-week low and US futures slid as evidence of a second virus wave dashed hopes of a quick economic recovery. Treasuries and the dollar rose.
The Stoxx Europe 600 Index pared some losses, but was still 1.4% lower. S&P 500 futures sank 2.2% and Treasuries rallied, pushing the 10-year yield to 0.67%. BP Plc slumped after announcing it will write down the value of its business by as much as $17.5 billion and predicted the pandemic will be a long-term hit to energy demand.
After a fierce rally sent global equities close to their pre-pandemic levels, sentiment in markets is starting to sour. Evidence is emerging that a second wave of the virus is underway and economic data points to a slow and difficult recovery.
“We’ve gone risk-off because the reality of the U-shape pick-up” is hitting home, David Bloom, global head of foreign-exchange strategy at HSBC Holdings Plc, said on Bloomberg TV. “It’s a U-shape pick-up, and it’s going to be slow and patchy” he said of the recovery.
In China, a string of top-tier data all showed that factory output, consumer spending and investment continued to improve in May, but there are few signs of a broad-based rebound needed to spur a V-shaped recovery.
On the virus front, more than 20 US states are seeing a pick-up in cases. Spreading cases in Beijing have also raised concern of a resurgence of the pandemic in China and a former Food and Drug Administration chief said new US outbreaks are occurring. In other markets, bitcoin slid below $9,000 for the first time since May.
Meanwhile, policy decisions from the Bank of Japan, Bank of England and the Swiss National Bank are due this week.
Futures on the S&P 500 Index decreased 1.8% as of 9:55 am New York time and the Stoxx Europe 600 Index fell 1%.
While the MSCI Asia Pacific Index declined 2.3%, the MSCI Emerging Market Index fell 1.9%.
The Bloomberg Dollar Spot Index gained 0.2% to 1,216.55 and the euro climbed 0.1% to $1.1262. The British pound was little changed at $1.2538 and the Japanese yen strengthened 0.1% to 107.27 per dollar.
While the yield on 10-year Treasuries sank three basis points to 0.68%, the yield on two-year Treasuries decreased one basis point to 0.18% and Germany’s 10-year yield dipped one basis point to -0.45%. Britain’s 10-year yield also declined two basis points to 0.192%.
As West Texas Intermediate crude dipped 2.7% to $35.56 a barrel, gold weakened 0.6% to $1,720.55 an ounce.