European stocks fall most since July; US futures slide

Bloomberg

European stocks fall the most since July after a report on bank allegations and signs that London is heading for a second lockdown. US equity futures sank and Treasuries rise.
Airlines and travel companies led losses in the Europe Stoxx 600 Index.
With virus cases climbing across Europe, there’s growing speculation that officials will be forced to apply tougher restrictions and risk crippling economic growth. Chief Medical Officer Chris Whitty is set to warn that the UK is at a “critical point” and Germany’s health minister said that the
trend of cases in Europe is “worrying.”
Traders also said the US political battle over who will be the next Supreme Court justice is also weighing on sentiment. Senate Majority Leader Mitch McConnell has said he would schedule a vote to confirm Donald Trump’s nominee to succeed Justice Ruth Bader Ginsburg after her death. But Democrats are fighting against efforts to rush the vote, with presidential nominee Joe Biden warning that it would “inflict irreversible damage” on the country.
“The market remains concerned about the broader risk emulating from the US: Covid, the Supreme Court fight and the upcoming presidential elections,” said Peter Rosenstreich, head of market strategy at Swissquote Bank
SA. “With US tech stocks looking weak, the need to jump
right into US assets feels less critical.”
In Asia, equities trading was subdued. Japan’s stock market was shut for a holiday. The Hang Seng Index slid 1.5%, while equities in China and Australia also retreated. Taiwan’s dollar strengthened to a level not seen in seven years.
Elsewhere, the European Central Bank has launched a review of its pandemic bond-buying program to consider how long it should continue and whether its exceptional flexibility should be extended to older programs, the Financial Times reported.
Despite global equity valuations remaining close to an almost two-decade high, fund flow data show money is continuing to move into US stocks. With the Fed anchoring interest rates near zero for the foreseeable future, profits are expected to recover somewhat from the pandemic-induced malaise.
“There’re too much expectations about US economic resilience,” said Fabrizio Fiorini, chief investment officer at Pramerica SGR SpA. “There is more selloff to come. Election risk is underestimated.”
Futures on the S&P 500 Index declined 1% as of 9:16 am London time and the Stoxx Europe 600 Index fell 1.6%.
While the MSCI Asia Pacific Index decreased 0.4%, the MSCI Emerging Market Index dipped 0.7%.
The Bloomberg Dollar Spot Index decreased 0.1% and the euro increased 0.1% to $1.1824. The British pound gained 0.2% to $1.2867.
While the Japanese yen strengthened 0.5% to 104.11 per dollar, the offshore yuan strengthened 0.2% to 6.7714 per dollar.
The yield on 10-year Treasuries sinks two basis points to 0.66% and the yield on two-year Treasuries decreased less than one basis point to 0.14%.
While Germany’s 10-year yield declined one basis point to -0.51%, Britain’s 10-year yield fell one basis point to 0.156%. Japan’s 10-year yield decreased less than one basis point to 0.015%.
West Texas Intermediate crude declined 1.3% to $40 a barrel and Brent crude dipped 1.3% to $42.13 a barrel. Gold strengthened 0.1% to $1,946.48 an ounce.