(Bloomberg) – US index futures fell alongside European stocks on Monday as the equity markets struggled to end the worst rout since the financial crisis amid the continued spread of the coronavirus. Bonds extended a rally and oil rose.
Contracts on the S&P 500 index had previously increased by 2.4%, but the trend gradually faded during the European morning, as new cases of viruses were reported and the OECD has revised downwards its global growth forecast. The index also reversed a big early leap as the stock gauge in Italy, the region’s epicenter for virus cases, dropped.
The earlier rebound attempt followed a rare statement by the Federal Reserve on Friday that opened the door to a rate cut based on the “evolutionary risks” posed by the epidemic. Central banks in Japan and the United Kingdom followed suit with messages of support. Money market operators expect the European Central Bank to ease rates by 10 basis points in April. Most basic European bonds rose, following Treasury bills as they rallied for an eighth day. The dollar slipped against the euro and most major currencies.
Investors are weighing central bank comments against economists’ growing pessimism about global growth, with mounting fears that the virus will cause more losses after the worst week in the S&P 500 since 2008. The CSI 300 index China jumped 3.2% on Monday, even after the nation saw a much deeper contraction in manufacturing than expected.
“We will start to see more rhetoric from governments to approach the situation from the perspective of fiscal easing and the central bank,” said Damien Loh, chief investment officer at Ensemble Capital Pte in Singapore. “We might see a risk leg, but it seems to me that most of the bad news has been incorporated.”
The global death toll from the virus has exceeded 3,000. Cases in the United States increased over the weekend, with the first infections appearing in New York, Brussels and Berlin, while cases jumped in the hot spots of Italy and South Korea. President Donald Trump is scheduled to meet with pharmaceutical industry leaders at 3 p.m. Washington time Monday.
Elsewhere, Australian and New Zealand 10-year bond yields hit new records.
Here are some key events to come:
- A key indicator from the factory on Monday should show that US manufacturing nearly stagnated last month. The ISM purchasing managers index should drop from 50.9 to 50.5.
- The Reserve Bank of Australia sets out its policy on Tuesday.
- US citizens in states like California and Texas will vote “Super Tuesday” for a Democratic candidate to run against President Donald Trump in the November elections.
- The Bank of Canada released a rate ruling on Wednesday.
- OPEC ministers meet in Vienna on March 5 and 6.
These are the main movements on the markets:
stocks
- Futures on the S&P 500 Index fell 0.3% at 6:28 a.m. New York time.
- futures contracts gained 0.1%.
- The Stoxx Europe 600 index decreased by 0.6%.
- Italy fell 2.8%.
- The MSCI Asia Pacific index rose 0.8%.
Currencies
- The Bloomberg Dollar Spot index fell 0.2%.
- The euro rose 0.6% to $ 1.1095.
- The British pound fell 0.5% to $ 1.2757.
- The Japanese yen appreciated 0.3% to 107.58 against the dollar.
- The South Korean won strengthened 1.8% to 1,193.57 against the dollar.
Obligations
- The 10-year Treasury bill yield fell nine basis points to 1.06%.
- The yield on two-year treasury bills fell 19 basis points to 0.72%.
- Germany’s 10-year yield fell six basis points to -0.66%.
- Australia’s 10-year yield fell by one basis point to 0.808%.
Raw materials
- Crude West Texas Intermediate jumped 1.3% to $ 45.35 a barrel.
- Iron ore rose 5.6% to $ 86.90 a metric ton.
- The LME increased 0.6% to $ 5,669 per metric ton.
- LME aluminum rose 0.2% to $ 1,697.50 a metric ton.
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