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Shanghai shares snap two-day rally; U.S. equity futures tumble
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Ten-year Treasury yields fall further below 3.20%; yen gains
European stocks slumped alongside U.S. futures, tracking a rout in Asia as the global equity selloff resumed. Investors took shelter in safe-haven assets, pushing up prices of the yen, gold and Treasuries.
The Stoxx Europe 600 Index slid toward the lowest level in more than a month as Asian equities teetered on the verge of a bear market. Among the steepest decreases were in Japan, Hong Kong and China, where shares had had the biggest jump in more than two years Monday. Gold headed for its highest close in three months and benchmark Treasury yields dropped to 3.15 percent.
Investor nerves are on full display in the flight to quality beginning to take shape after global equities tried and failed to stem this month’s declines. U.S. growth data later in the week as well as earnings from companies including Amazon, Alphabet, Microsoft and Intel could be key to how far much further the drop will go.
“Global financial markets continue to struggle to rally as various geopolitical concerns weigh on investor confidence,” Nick Twidale, chief operating officer at Rakuten Securities Australia, said in a note. “With the rest of the world looking much more pessimistic in the current environment,” markets were poised for “a firm correction,” he added.
Equities failed to get any reprieve after China announced fresh measures to ease the funding strains of private companies, as top officials seek to restore confidence in the world’s second-largest economy. The State Council announced it would support bond financing by private firms, and said the central bank will provide funding to facilitate this.
Elsewhere, oil traded near the lowest in almost five weeks. The pound fluctuated as the saga of Brexit negotiations and Theresa May’s leadership dragged on. Emerging-market equities slumped.
Terminal readers can read more in our Markets Live blog.
Here are some key events coming up this week:
- Earnings season gathers pace with notable highlights including Amazon.com, Alphabet, Intel, Verizon, Microsoft, Twitter, McDonald’s, UBS, Deutsche Bank, Barclays, Total, United Technologies, Caterpillar, Halliburton and Linde.
- Monetary policy decisions are due in Europe, Indonesia, Sweden and Canada.
- ECB policy makers could on Thursday confirm that asset purchases will end this year, reiterating its pledge to keep interest rates at record lows through summer 2019. President Mario Draghi will hold a press conference.
- U.S. gross domestic product growth may have slowed in the third quarter, yet remained near its best pace since mid-2015, according to forecasts ahead of Friday’s release.
And these are the main moves in markets:
Stocks
- Futures on the S&P 500 Index dipped 1.1 percent as of 8:14 a.m. London time, hitting the lowest in 16 weeks with their fifth consecutive decline.
- The Stoxx Europe 600 Index fell 1 percent, reaching the lowest in more than 22 months on its fifth consecutive decline and the biggest fall in more than a week.
- The U.K.’s FTSE 100 Index fell 0.7 percent to the lowest in seven months on the largest fall in more than a week.
- Germany’s DAX Index fell 1.4 percent, reaching the lowest in more than 22 months on its fifth straight decline and the biggest fall in more than a week.
- The MSCI Asia Pacific Index fell 2.1 percent to the lowest in more than 17 months on the largest fall in more than a week.
- The MSCI Emerging Market Index fell 1.8 percent to the lowest in more than a week on the biggest fall in more than a week.
Currencies
- The Bloomberg Dollar Spot Index fell less than 0.05 percent.
- The euro dipped 0.1 percent to $1.1457.
- The British pound climbed less than 0.05 percent to $1.2966.
- The Japanese yen gained 0.4 percent to 112.38 per dollar.
Bonds
- The yield on 10-year Treasuries decreased five basis points to 3.15 percent, the lowest in more than a week on the largest tumble in almost four weeks.
- Germany’s 10-year yield fell two basis points to 0.43 percent.
- Britain’s 10-year yield decreased three basis points to 1.493 percent, the lowest in almost six weeks.
- The spread of Italy’s 10-year bonds over Germany’s rose six basis points to 3.0983 percentage points.
Commodities
- West Texas Intermediate crude fell 0.4 percent to $69.09 a barrel.
- Gold advanced 0.8 percent to $1,232.08 an ounce, the highest in 14 weeks on the biggest gain in more than a week.
By Andreea Papuc and Natasha Doff
— With assistance by Michael Patterson
Source: Bloomberg