U.S. Futures Slip on Rising Tensions With China: Markets Wrap

These are the main moves in markets:

Stocks

• Futures on the S&P 500 Index decreased 0.2% as of 7:17 a.m. New York time.
• The Stoxx Europe 600 Index sank 1%.
• The MSCI Asia Pacific Index declined 0.8%.
• The MSCI Emerging Market Index dipped 0.6%.

Currencies

• The Bloomberg Dollar Spot Index decreased 0.2%.
• The euro jumped 0.3% to $1.1566.
• The British pound fell 0.3% to $1.269.
• The onshore yuan weakened 0.2% to 6.998 per dollar.
• The Japanese yen weakened 0.2% to 107.01 per dollar.

Bonds

• The yield on 10-year Treasuries fell one basis point to 0.59%.
• The yield on two-year Treasuries decreased less than one basis point to 0.14%.
• Germany’s 10-year yield fell two basis points to -0.48%.
• Britain’s 10-year yield dipped less than one basis point to 0.132%.
• Japan’s 10-year yield declined one basis point to 0.019%.

Commodities

• West Texas Intermediate crude decreased 1.4% to $41.35 a barrel.
• Brent crude declined 1.2% to $43.81 a barrel.
• Gold strengthened 0.9% to $1,858.53 an ounce.

Futures on the S&P 500 Index slipped and European stocks fell after a diplomatic flare-up between America and China added to concerns over the deteriorating relationship between the economic superpowers.

Treasuries edged higher and the dollar briefly rose on news that the U.S. ordered China’s Houston consulate to quickly close. The State Department later said the order was to protect intellectual property and “private information” of Americans. China’s Foreign Ministry said it would “react with firm countermeasures.”

The yuan fell, Hong Kong shares deepened their decline and both gold and silver trimmed some of their gains.

Fresh Sino-U.S. tension including new charges of Chinese hacking are adding to potential risks weighing on investors who recently drove global equities to a five-month high. After the success of a European rescue package this week, Senate Republicans and the Trump administration are struggling to reach consensus on another stimulus plan. The president warned the coronavirus crisis will probably worsen before improving.

I’m more concerned going into the August, September period: what’s going to then be the next catalyst to take the broader market higher,” Andrew Sheets, a cross-asset strategist at Morgan Stanley, said on Bloomberg TV. It’s going to be “a tougher period for stocks,” he said.

Elsewhere, oil in New York dropped from a four-month high on signs of a surprise gain in U.S. crude stockpiles.

Here are some key events coming up:

• Quarterly earnings gather steam, with reports due from Microsoft, Blackstone Group, Roche, Intel, Unilever, Canadian Pacific, Daimler, Hyundai and Mattel.
• The EIA crude oil inventory report is due Wednesday.
• U.S. weekly jobless claims come on Thursday.