European stocks extend global slump; futures advance

Bloomberg

European stocks extended a global retreat and German bonds climbed as investors weighed the risks of the upcoming earnings season and economic hit of rising virus cases.
S&P 500 and Nasdaq futures pointed to a higher open after finishing in the red yesterday. The UK’s two-year bonds yielded less than Japanese debt for the first time. In Asia, shares retreated across the region with Hong Kong stocks faring worst. Copper ended a six-day winning streak.
Market sentiment has taken a hit from signs the virus is throttling reopening plans in states like California, and concern that equity valuations are stretched with global stocks trading near pre-pandemic highs. Traders are braced for earnings reports this week that will provide clues on the outlook for corporate profits.
“We are marginally risk-off today, driven by the dive into the close in the US,” said Charles Diebel, head of fixed income at Mediolanum International Funds. “The real worrying aspect for the market really is that the rise in US infections will make people behave like a lockdown even if they are opening up.”
More tensions between Beijing and Washington added to the pessimistic mood in markets. The Trump administration rejected China’s expansive maritime claims in the South China Sea, reversing a previous policy of not taking sides in such disputes.
Futures on the S&P 500 Index climbed 0.3% as of 9:30 am London time and the Stoxx Europe 600 Index declined 1.3%.
While the MSCI Asia Pacific Index dipped 0.9%, the MSCI Emerging Market Index dipped 1.1%.
While the Bloomberg Dollar Spot Index advanced 0.1%, the euro dipped 0.1% to $1.1339.
The British pound sank 0.4% to $1.2513 and the Japanese yen was unchanged at 107.29 per dollar. The offshore yuan weakened 0.3% to 7.0246 per dollar.
The yield on 10-year Treasuries increased less than one basis point to 0.62% and the yield on two-year Treasuries climbed less than one basis point to 0.15%.
While Germany’s 10-year yield fell two basis points to -0.43%, Britain’s 10-year yield fell three basis points to 0.156% and Japan’s 10-year yield declined one basis point to 0.033%.
While West Texas Intermediate crude fell 0.4% to $39.50 a barrel, Brent crude decreased 0.1% to $42.21 a barrel and gold weakened 0.2% to $1,799.56 an ounce.