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Bloomberg
US equity-index futures dipped while stocks slumped in Europe and Asia as investors weighed the deepening political gridlock in Washington against prospects for reduced trade tension between America and China. The dollar advanced and oil fell.
Contracts for all three main equity gauges signalled more declines at the New York open as traders grappled with the impeachment investigation into President Donald Trump.
The Stoxx Europe 600 index headed for its largest drop in six weeks, with Electricite de France SA the biggest loser after announcing extra costs and a possible delay in building two atomic reactors in Britain.
Asian benchmarks retreated across the board, with losses of more than 1 percent in Hong Kong, South Korea, mainland China and India.
Crude futures declined after Saudi Aramco said it was ahead of schedule in restoring output that was reduced by a drone attack earlier in September.
A dollar gauge was on track for its biggest advance since July, the yen fell and Treasuries stabilised.
Markets have seemed to gyrate on the twists and turns of the protectionist battle between the two largest economies, with this year’s epic bond rally recovering from a pullback and US stocks lingering within sight of a record high.
The sudden escalation of political risk in Washington comes as economic signals deteriorate globally, adding a fresh complication for investors trying to decide whether central banks will be able to shore up growth.
Elsewhere, the pound reversed its gain as UK Prime Minister Boris Johnson returned to the country after Britain’s Supreme Court ruled that he’d broken the law by suspending parliament.
In Japan, five-year government bond yields fell to a record low following comments from central bank Governor Haruhiko Kuroda that added to speculation of an interest-rate cut in October.
Chicago Fed President Charles Evans will discuss the economic outlook and monetary policy in Illinois on Wednesday.
Thailand decides on monetary policy on Wednesday, followed by the Philippines on Thursday. Core PCE —the Fed’s preferred inflation measure — is forecast for 1.8 percent. That’s due on Friday.
Futures on the S&P 500 Index fell 0.2 percent in New York. The Stoxx Europe 600 Index sank 1.4 percent. Switzerland’s SMI Index sank 1.5 percent. The MSCI Asia Pacific Index sank 0.6 percent.
The Bloomberg Dollar Spot Index jumped 0.3 percent. The British pound dipped 0.6 percent to $1.2408.
The euro declined 0.2 percent to $1.0993. The Japanese yen weakened 0.2 percent to 107.33 per dollar. The Swedish krona weakened 0.3 percent to 10.6792 per euro. The yield on 10-year Treasuries fell one basis point to 1.64 percent.