European stocks tumble to 5-month low; futures slide

Bloomberg

European stocks dropped to a five-month low and US equity futures slumped as rising coronavirus infections and tougher lockdowns added to worries about the economic hit from pandemic.
The Stoxx Europe 600 Index sinks 2.5% after German Chancellor Angela Merkel proposed closing bars and restaurants for a month to curb the spread of the virus. The selloff across Europe was broad, with banks and travel shares seeing the steepest declines.
Haven assets, such as Treasuries, the dollar and yen rise. S&P 500 futures sink 1.5% and the VIX Index, a measure of US equity volatility, climbed to the highest level since June.
“We’ve been warning investors over the last few days in particular to maybe pare back a little bit of their strong risk position,” Laura Fitzsimmons, JPMorgan Australia’s executive director of macro sales, said on Bloomberg TV. “As you see the odds start to wane a little bit more for Biden, maybe that continues a bit more. We all remember four years ago when markets were very much surprised.”
Markets in the US and Europe have slumped this week as virus cases surge and American lawmakers fail to agree on an economic aid package
before the election next week.
Analysts are also warning about the increased volatility in the markets ahead of the vote, with some saying that
a contested election is still a possibility.
In Asia, stocks fared better. The MSCI Asia Pacific Index was flat on Wednesday, and markets in South Korea and Shanghai posted modest gains. In China, indicators tracked by Bloomberg showed the recovery continued to display mixed signals while remaining broadly steady in October.
Elsewhere, oil retreated back below $39 a barrel after an industry report pointed to a bigger-than-expected increase in US crude stockpiles.
Microsoft Corp. slipped in extended trading. The company’s first-quarter revenue climbed a better-than-projected 12%, strengthened by corporate demand for cloud-computing services to support customers’ remote workers and move more of their business online.
Futures on the S&P 500 Index fall 0.8% as of 8:50 am London time and the Stoxx Europe 600 Index fall 2.1%. The MSCI Asia Pacific Index dipped 0.1%, the MSCI Emerging Market Index declined 0.4%.
The Bloomberg Dollar Spot Index climbed 0.3% to 1,164.99, the euro declined 0.3% to $1.1761.
While the British pound falls 0.3% to $1.3004, the Japanese yen strengthened 0.1% to 104.27 per dollar.
The yield on 10-year Treasuries declined one basis point to 0.76% and the yield on two-year Treasuries dipped less than one basis point to 0.14%.
While Germany’s 10-year yield decreased two basis points to -0.63%, Britain’s 10-year yield fell one basis point to 0.222%.
West Texas Intermediate crude declined 2.2% to $38.08 a barrel and gold weakened 0.2% to $1,903.89 an ounce.