por admin » Jue Jun 11, 2020 5:43 am
U.S. Futures Slump on Fed Caution and Virus Fears: Markets Wrap
Yakob Peterseil
June 10, 2020, 5:34 PM EDT
Europe, Asia stocks sink after Powell warns of economic damage
U.S. equity futures tumbled with stocks globally on Thursday as fears of a second wave of the virus and a cautious outlook from the Federal Reserve clouded hopes for a speedy economic recovery.
Contracts on the S&P 500 Index extended their losses by as much as 2% a day after Fed Chairman Jerome Powell suggested the pandemic could inflict long-lasting damage on the economy. Reports of coronavirus infection rates jumping in parts of America added to the risk-off mood. The Stoxx Europe 600 Index sank, with sectors scooped up in the recent rally such as banks and travel leading declines.
Treasuries continued higher alongside German bunds on haven demand, while the dollar rebounded from Wednesday’s losses.
Options show bears nudge ahead of bulls in three-month outlook
“This is the first time we’ve had a little bit of negative newsflow recently” on developments in the coronavirus, Dean Turner, economist at UBS Global Wealth Management, told Bloomberg TV. “Put that in the context of how far markets have come in the last few weeks, it’s not at all surprising that we get a little bit of profit-taking at this stage.”
Stocks are catching their breath after a strong rally from March lows as investors weigh a rocky road to economic recovery against promised stimulus measures. U.S. virus cases now top 2 million, with fears of a second wave in Texas and Florida. Treasury Secretary Steve Mnuchin said the U.S. “definitely” needs more fiscal stimulus, supporting prospects for another round this summer. European policy makers meet Thursday on whether to boost aid.
Markets are shifting while investors digest the Fed’s decision to leave its policy settings unchanged while pledging to keep buying bonds. Powell said the central bank had a briefing on yield-curve control, amid expectations from some economists that the central bank will follow Australia’s and Japan’s in adopting such a tool.
Natixis Senior Economist, Emerging Asia, Trinh Nguyen sees a convincing case where Fed rates are zero-bound until 2023.
Elsewhere, Japanese and Australia benchmarks led a broad decline among Asia equity markets. Crude oil declined while gold held onto most of Wednesday’s gain.
What to watch this week:
Euro-area finance ministers meet Thursday to discuss the EU’s recovery package and Eurogroup presidency succession.
These are some of the main moves in markets:
Stocks
Futures on the S&P 500 Index sank 1.6% as of 6:13 a.m. New York time.
The Stoxx Europe 600 Index decreased 2.1%.
The MSCI Asia Pacific Index declined 1.8%.
The MSCI Emerging Market Index declined 1.1%.
Currencies
The Bloomberg Dollar Spot Index jumped 0.4%.
The euro was little changed at $1.1379.
The British pound sank 0.5% to $1.2686.
The onshore yuan weakened 0.1% to 7.067 per dollar.
The Japanese yen strengthened 0.2% to 106.94 per dollar.
Bonds
The yield on 10-year Treasuries fell three basis points to 0.70%.
The yield on two-year Treasuries climbed one basis point to 0.17%.
Germany’s 10-year yield sank five basis points to -0.38%.
Britain’s 10-year yield fell four basis points to 0.223%.
Japan’s 10-year yield dipped one basis point to 0.011%.
Commodities
West Texas Intermediate crude declined 3% to $38.40 a barrel.
Brent crude dipped 2.7% to $40.59 a barrel.
Gold weakened 0.4% to $1,732.31 an ounce.