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Global stocks, futures drift amid virus spread: markets wrap

The 10-year Treasury yield steadied around 0.8%. Oil climbed with copper, while gold edged higher.
Image: Kiyoshi Ota/Bloomberg

Global stocks and equity futures saw choppy trading Tuesday as investors weighed whether coronavirus cases will hurt the global economy and stimulus talks in Washington dragged on. The dollar retreated.

US futures edged higher with their European counterparts, while Asian stocks pared earlier losses. Shares were little changed in Japan and China, and slipped in South Korea, Australia and Hong Kong. Declines were more modest than those seen in the US overnight, when the S&P 500 saw its biggest loss in a month. Ongoing spending talks in Washington continued to weigh on sentiment as prospects dimmed for fiscal aid before the presidential election.

The 10-year Treasury yield steadied around 0.8%. Oil climbed with copper, while gold edged higher.

Surging coronavirus infections around the globe are worrying investors already cautious with the US election a week away and time running out to finish an aid package before then. Europe took a step closer to the strict rules imposed during the initial wave of the pandemic, with leaders struggling to regain control of the spread while confronting growing opposition to restrictions.

“Investors should stay patient while waiting for the election results to clarify,” said Tai Hui, chief Asia market strategist at JPMorgan Asset Management. “The potential optimism around a deal could be dampened as we approach election day. The recent surge in infections in the US and Europe is also denting market sentiment.”

In Washington, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin again attempted to reconcile differences on a virus relief package. Differences between the two sides “have narrowed,” but “the more it narrows, the more conditions come up on the other side,” White House economic adviser Larry Kudlow told reporters.

These are some events to watch this week:

  • The Chinese Communist Party’s Central Committee holds its all-important plenum, where it’s expected to chart the course for the economy’s development for the next 15 years. Through October 29.
  • Brexit negotiating teams have started intense daily negotiations, and these are likely to continue as both sides push to finalise a deal by the middle of November.
  • Bank of Japan and the European Central Bank have monetary policy decisions Thursday, followed by briefings from Governor Kuroda and President Lagarde.
  • The first reading of US 3Q GDP Thursday is anticipated to be the strongest on record following a record dive in the prior quarter as many businesses were shuttered by the pandemic.

Here are the major moves in markets:

Stocks

  • S&P 500 futures rose 0.3% as of 3:03 p.m. in Tokyo. The S&P 500 Index decreased 1.9%.
  • Topix index fell 0.1%.
  • Australia’s S&P/ASX 200 Index dropped 1.7%.
  • South Korea’s Kospi index fell 0.8%.
  • Hang Seng Index fell 0.8%.
  • Shanghai Composite Index was flat.
  • Euro Stoxx 50 futures rose 0.2%.

Currencies

  • The yen was up 0.1% to 104.73 per dollar.
  • The offshore yuan traded little changed at 6.6917 per dollar.
  • The Bloomberg Dollar Spot Index dipped 0.2%.
  • The euro rose 0.2% to $1.1835.
  • The British pound was up 0.1% to $1.3040.

Bonds

  • The yield on 10-year Treasuries was steady at 0.80%.
  • Australia’s 10-year bond yield held at 0.80%.

Commodities

  • West Texas Intermediate crude rose 0.8% to $38.85 a barrel.
  • Gold added 0.4% to $1,908.84 an ounce.
© 2020 Bloomberg

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