European stocks turn lower with US futures; oil advances

Bloomberg

European stocks turned lower alongside US equity futures on Tuesday as the risk-on mood that kicked-off the week faded. Oil prices rose for a fourth straight session.
The Stoxx Europe 600 Index had opened in the green following news that Germany and France have backed a $546 billion, European Union-wide economic recovery fund. But after strong gains on Monday, the gauge couldn’t hold the move and reversed to trade lower. Contracts for the S&P 500 also pointed to a soft open having been up earlier. Asian equities rallied, tracking the big gains on Wall Street on May 18.
Treasuries and European government bonds climbed, with peripheral yields falling the most on the recovery fund news. Sterling strengthened after the UK announced plans for 30 billion pounds ($37 billion) in tariff cuts after Brexit. West Texas crude’s ascent kept it above $30 a barrel, though it came off highs touched in Asian trade.
Riskier assets kicked off the week with big gains after Moderna Inc. fueled hopes for a coronavirus vaccine, but investors are struggling to maintain the momentum as they continue to monitor efforts to both contain the pandemic and restart economies. Federal Reserve Chairman Jerome Powell is scheduled to speak on the state of the recovery on Tuesday, amid expectations he’ll press for further fiscal support to address one of the steepest downturns since the Depression.
“Short-lived bounces in stock prices even while markets establish new lows are not unheard of,” Ashwin Alankar, head of global asset allocation at Janus Henderson, said in a note. “Forward-looking metrics such as earnings revisions and options prices, on the other hand, sound a more cautious tone both for the economy and stock prices.”
Headwinds remain for stocks, not least a deteriorating US-China relationship. In a further sign of tightening scrutiny on capital flows to the Asian nation, Nasdaq is set to unveil new rules for initial public offerings including tougher accounting standards that will make it more difficult for some Chinese companies to list on the exchange.
Futures on the S&P 500 Index fell 0.3% as of 9:23 am London time and the Stoxx Europe 600 Index decreased 0.7%. The MSCI Asia Pacific Index advanced by1.8%.
While the Bloomberg Dollar Spot Index decreased 0.1%, the euro increased 0.2% to $1.093.
The British pound gained 0.3% to $1.2231 and the Japanese yen was little changed at 107.36 per dollar.
The yield on 10-year Treasuries dipped three basis points to 0.70% and Germany’s 10-year yield fell two basis points to -0.48%. Britain’s 10-year yield also decreased two basis points to 0.233%.
While West Texas Intermediate crude increased 2.2% to $32.51 a barrel, gold was little changed at $1,733.41 an ounce.