S&P 500 Futures Hit Limit-Down; Treasuries Surge: Markets Wrap

 

Here are some of Monday’s key moves across major assets:

• Contracts on the S&P 500, Nasdaq 100 and Dow Jones Industrial Average all sank almost 5%, tripping their market circuit breakers; ETFs in premarket show even bigger losses.
• Treasury yields plunged all across the curve, with that of benchmark 10-year notes retreating more than 33 basis points at one point before trimming the decline.
• Shares tumbled in Asia and Europe, where the continent is now reporting more new virus cases each day than China did at its peak as more countries lock down. The Stoxx Europe 600 Index plunged almost 10% led by travel and construction shares.
• The yen surged, the Swiss franc rallied and the dollar fluctuated.
• Oil resumed losses. Gold failed again to capitalize on the rush to havens and reversed an earlier gain to tumble.
• Bonds declined across most of Europe, where a measure of market stress hit levels not seen since the 2011-2012 euro crisis.

 

The Fed and other central banks have dramatically stepped up efforts to stabilize capital markets and liquidity, yet the moves have so far failed to boost sentiment or improve the rapidly deteriorating global economic outlook. An International Monetary Fund pledge to mobilize its $1 trillion lending capacity also had little impact in markets.

The problem is, bad news keeps stacking up. A regional gauge of U.S. factory activity plunged. Ryanair Holdings Plc said Monday it will ground most of its European aircraft while a consultant said the pandemic will bankrupt most airlines worldwide before June unless governments and the industry step in. Nike Inc. and Apple Inc. announced mass store closings.

“In normal circumstances, a large policy response like this would put a floor under risk assets and support a recovery,” Jason Daw, a strategist at Societe Generale SA in Singapore, wrote in a note. “However, the size of the growth shock is becoming exponential and markets are rightfully questioning what else monetary policy can do and discounting its effectiveness in mitigating coronavirus-induced downside risks.”

The yen rebounded from Friday’s plunge after the Fed and five counterparts said they would deploy foreign-exchange swap lines. Australian equities fell almost 10%, the most since 1992, even after the Reserve Bank of Australia said it stood ready to buy bonds for the first time — an announcement that sent yields tumbling. New Zealand’s currency slumped after an emergency rate cut by the country’s central bank.

Meanwhile, China reported Monday that output and retail sales tumbled in the past two months.

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