Stocks drop amid Hong Kong unrest, Treasuries advance

Bloomberg

American equity-index futures slipped on Wednesday while European shares struggled for traction as tensions over Hong Kong mounted and earnings season rolled on. Treasuries gained and the dollar was steady.
Contracts on all three major US gauges stayed lower even after Bank of America reported upbeat earnings. The Stoxx Europe 600 was little changed after paring a decline as gains in technology shares offset drops for miners. Earlier, benchmarks rose from Tokyo and Seoul to Sydney, though most gauges trimmed the advance after China threatened to retaliate if the US Congress passed a bill offering support to pro-democracy protesters in Hong Kong. Stocks dipped in Shanghai and the yuan weakened. The British pound retreated as the chance of an imminent Brexit deal appeared to fade.
The Hong Kong crisis and Brexit doubts are moving geopolitical risks back to the forefront for investors after positive earnings from corporate heavyweights including JPMorgan and Johnson & Johnson lifted spirits.
The US House passed legislation to require an annual review of whether Hong Kong is sufficiently autonomous from Beijing to justify its special trading status under American law. In the city itself, Chief Executive Carrie Lam announced housing initiatives that boosted property and finance stocks.
Netflix and IBM were among US companies expected to report on Wednesday, while retail sales data may give more clues on the outlook for the world’s biggest economy.
Elsewhere, Turkish stocks fell with government bonds after the US brought a criminal case against one of the nation’s largest banks, in what could be an escalation of Washington’s efforts to reprimand Ankara for its military incursion into northern Syria.
South Africa’s rand sank as the state-owned power company announced a new round of rolling blackouts. Crude oil futures drifted. Gold ticked higher.
US retail sales are forecast to increase for a seventh straight month. Sales in the “control group” are also expected to rise. Consumer spending is carrying the weight of US economic growth so the data will be monitored closely for any signs of slowing.
China releases third-quarter GDP, September industrial production and retail sales data on Friday.
Futures on the S&P 500 Index fell 0.3% in New York. The Stoxx Europe 600 Index was little changed. The UK’s FTSE 100 Index declined 0.1%. The MSCI All-Country World Index increased 0.1%. The MSCI Emerging Market Index advanced 0.2%.
The Bloomberg Dollar Spot Index increased 0.1%. The euro decreased 0.1% to $1.1027.
The British pound fell 0.3% to $1.2753. The Japanese yen strengthened 0.1% to 108.74 per dollar.
The yield on 10-year Treasuries decreased three basis points to 1.74%. The yield on two-year Treasuries fell two basis points to 1.60%. Britain’s 10-year yield sank four basis points to 0.658%. Germany’s 10-year yield climbed less than one basis point to -0.41%. Japan’s 10-year yield increased one basis point to -0.161%.
West Texas Intermediate crude gained 0.1% to $52.85 a barrel. Gold was little changed at $1,481.15 an ounce. Iron ore sank 5.4% to $83.13 per metric ton.