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Bloomberg
US index futures and European equities fell as concern over the possibility of a recession outweighed optimism over US-China talks aimed at tariff reductions. The euro falls to a 20-year low.
Contracts on the S&P 500 and Nasdaq 100 indexes dropped at least 0.6% each as US markets were set to return after Independence Day holiday. In Europe, stocks tied to economic activity such as carmakers and commodity companies posted the biggest losses. Investors rushed to the safety of the dollar, while a selloff in Treasuries eased.
US and Chinese officials discussed economic sanctions and tariffs amid reports Washington may roll back some of the trade levies imposed by former President Donald Trump. While that came as a relief for markets, investors continued to fret over the possibility of a US recession coupled with monetary tightening to combat elevated inflation.
US markets reopen on Tuesday after capping 11 declines in the past 13 weeks as a first-quarter contraction in the world’s largest economy boosted the prospects of a recession. At the same time, consumer prices are far from peaking with inflation surging to 8.6% in May that left little room for the Federal Reserve to slow monetary tightening.
Treasuries pared a slump as a risk-off sentiment took hold. The two-year yield was 3 basis points higher, after rising as many as 13 basis points. In
Europe, bonds rallied after Monday’s selloff.
The euro extended its losses, tumbling to the lowest level since 2002 against the dollar. It also slid to the weakest since January 2015 against the Swiss franc. A gauge of greenback’s strength rises 0.6%.
In Australia, the central bank rises key interest rate as expected to 1.35%. It’s among more than 80 central banks to have raised rates this year. The nation’s dollar weakened.
Brent crude hovered around $113 per barrel. Bitcoin falls below the $20,000 level.