Stocks lose steam in Europe with futures; bonds turn higher

Bloomberg

Stocks edged down in Europe alongside US index futures while bonds turned higher as investors waited for word on whether fresh fiscal stimulus will get approvals in the world’s largest economy.
Declines in health-care and food shares pulled the Stoxx Europe 600 Index lower after it briefly opened higher on the heels of a tech-fuelled rally on Wall Street that carried over into Asia. US index futures swung from gains to modest declines hours after the Nasdaq 100 set a fresh record high on Monday.
With global equities having retraced their pandemic-fuelled tumble since February, investors are focused on whether US Congress will approve fresh stimulus before the Senate leaves on an extended break on Friday, when monthly job data is due. Negotiations have become increasingly urgent with millions of jobless Americans left without additional aid.
“We see US stocks at risk of fading fiscal stimulus,” BlackRock Investment Institute strategists led by Mike Pyle wrote in a note. “US employment figures are in focus this week as this fiscal cliff nears and the pandemic’s spread in Sunbelt states is starting to affect economic activity.”
With risk assets losing steam, Treasures began recouping losses from Monday notched after data showed US manufacturing expanded in July at the fastest pace since March 2019.
European government bonds also turned higher. The dollar slipped against its major peers after a two-day rally
Meanwhile, tension between the US and China continues to simmer. President Donald Trump said TikTok, the video-sharing social networking service, will have to close its US business by September 15 — unless there’s a deal to sell the social media network’s American operations.
Elsewhere, West Texas-grade crude oil dipped after rising the most in nearly two weeks. Australian bonds pared losses after the nation’s central bank said it would resume bond buying Wednesday. Gold was steady.
While euro-zone is scheduled to report PMI for Wednesday, Reserve Bank of India and Bank of England will announce their rate decisions due on Thursday.
The Stoxx Europe 600 Index declined 0.2% as of 10:00 am London time and futures on the S&P 500 Index fell 0.3%. While Nasdaq 100 Index futures decreased 0.4%, the MSCI Asia Pacific Index increased 1.7%.
The Bloomberg Dollar Spot Index drops 0.1% and the euro climbed 0.3% to $1.1794. While the Japanese yen was little changed at 105.94 per dollar, South Africa’s rand weakened 0.3% to 17.2531 per dollar.
The yield on 10-year Treasuries sank one basis point to 0.54% and the yield on two-year Treasuries gained less than one basis point to 0.11%. Britain’s 10-year yield fell
less than one basis point to 0.097% and Germany’s 10-year yield decreased one basis point to -0.53%.
While West Texas Intermediate crude dipped 1.1% to $40.56 a barrel, gold was little changed at $1,976.96 an ounce and iron ore rose 0.7% to $111.28 per metric ton.