European stocks slide led by tech; US futures erase gain

Bloomberg

European stocks dropped after President Donald Trump stoked tensions with China and virus cases across Germany and the UK continued to rise. Treasury yields fall and oil dropped to a two-month low.
Technology shares led losses in the Europe Stoxx 600 Index, while the FTSE 100 Index was buoyed by the weaker pound. EasyJet Plc shares slumped after the discount airline said flight demand is lower than expected. The dollar index and gold were little changed.
US futures pointed to a weaker open after the long holiday weekend. S&P 500 contracts were little changed, while contracts on the Nasdaq 100 Index slipped 1.2%. Tesla Inc. shares dropped 7% in US pre-market trading. The company was widely expected to be added to the S&P 500 Index, but wasn’t chosen for the US stock benchmark.
Investors will be closely watching how tech shares react after last week’s selloff, which was driven by doubts over stretched valuations and reports that huge options positions have fanned a speculative fever. The US and China relationship is also back in focus after President Donald Trump said he plans to end America’s reliance on the country.
Trump also threatened to punish any American companies that create jobs overseas, and to forbid those that do business in China from winning federal contracts.
“The path of least resistance for the market may well be to test the downside,” said Peter Chatwell, head of multi-asset strategy at Mizuho International Plc. “Ultimately, if there is more selloff, I suspect real money investors will take the opportunity to buy the dip below last week’s levels.”
Royal Mail Plc, the privatised British postal service, surged 15% after saying it wants to overhaul its business and shift service to the parcels market.
The ECB will probably hold rates on Thursday but indicate that downside risks have intensified, suggesting further easing is possible before year-end.
Futures on the S&P 500 Index were little changed at 9:31 am London time and the Stoxx Europe 600 Index advanced 0.8%.
While the MSCI Asia Pacific Index increased 0.1%, the MSCI Emerging Market Index declined 0.3%. The Bloomberg Dollar Spot Index gained 0.4% and the euro was unchanged at $1.1817.
While the British pound fell 0.3% to $1.3124, the Japanese yen was little changed at 106.26 per dollar. The offshore yuan was little changed at 6.8343 per dollar.
The yield on 10-year Treasuries fall one basis point to 0.71% and the yield on two-year Treasuries dipped less than one basis point to 0.14%.
While Germany’s 10-year yield advanced one basis point to -0.46%, Britain’s 10-year yield sank two basis points to 0.244%. Japan’s 10-year yield decreased less than one basis point to 0.04%.
While West Texas Intermediate crude declined 2.8% to $38.42 a barrel, Brent crude dipped 2.3% to $41.38 a barrel and gold weakened 0.2% to $1,929.11 an ounce.