World Stock Rout Deepens and Treasuries Jump Again: Markets Wrap
These are the main moves in markets:
Stocks
- Futures on the S&P 500 Index fell 0.8% as of 7:36 a.m. New York time.
- Nasdaq 100 Index futures dipped 0.8%.
- The Stoxx Europe 600 Index fell 3.1%.
- Germany’s DAX Index decreased 3.6%.
- The MSCI Asia Pacific Index decreased 2.6%.
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%.
- The euro was little changed at $1.0998.
- The British pound was little changed at $1.2886.
- The Japanese yen strengthened 0.8% to 108.72 per dollar.
Bonds
- The yield on 10-year Treasuries fell five basis points to 1.21%.
- The yield on two-year Treasuries decreased eight basis points to 0.98%.
- Germany’s 10-year yield declined four basis points to -0.59%.
- Britain’s 10-year yield dipped three basis points to 0.437%.
Commodities
- West Texas Intermediate crude sank 2.9% to $45.71 a barrel.
- Iron ore decreased 1.5% to $82.35 per metric ton.
- LME copper declined 0.5% to $5,590.50 per metric ton.
- LME aluminum dipped 0.1% to $1,687.50 per metric ton.
- Gold weakened 1.3% to $1,623.17 an ounce.
Fear over the spreading coronavirus tightened its grip on global markets Friday, with stocks plunging across Europe and Asia a day after the worst rout on Wall Street since 2011. U.S. equity futures pointed to another drop at the New York open while investors diving into safe assets sent Treasury yields to new lows.
- Futures on the main American gauges all traded in the red. While they showed a more modest drop than elsewhere in the world, it still puts U.S. stocks on course for a seventh straight loss.
- The Stoxx Europe 600 Index pared a tumble of 4.5%, but still headed for the worst weekly performance since 2008. All 19 sectors of the gauge declined.
- Asian benchmarks from Tokyo and Seoul to Shanghai and Sydney posted drops of more than 3%.
- The yield on 10-year Treasuries slid to as low as 1.15% before pulling back above 1.2%; WTI crude oil sank toward $45 a barrel.
Terminal users can read more live analysis in Bloomberg’s markets blog.
More evidence of the coronavirus spreading outside China helped pour fuel on the sell-off. Germany quarantined about 1,000 people and Switzerland banned large events, leading to the Geneva car show being canceled. Hot spots Iran and South Korea revealed more coronavirus cases and Nigeria, Africa’s most populous country, confirmed the first infection south of the Sahara desert.
That’s all put shares worldwide on course for the worst week since the 2008 crisis, down around 10%. With the likes of Citigroup Inc. saying they want to see markets “closer to panic” before going all-in on global equities, the dip buyers who have helped make this bull market the longest on record are nowhere to be seen.
“It’s a messy, messy week,” said Ned Rumpeltin, the European head of currency strategy at Toronto-Dominion Bank. “The complacency that had defined the market’s behavior over the last few weeks is gone, that is for sure.”
Downgrades to the global outlook keep rolling in and money markets now see three Federal Reserve interest-rate cuts this year. Bank of America predicted that the global economy will see its weakest year since the financial crisis as the virus damages demand in China and beyond.
“Asset prices diverged significantly from growth in the past year, in part because of central bank policy, but also because passive investment’s main signal is price action,” reckons James McCormick, global head of desk strategy at NatWest Markets. “The COVID-19 escalation runs a real risk of virtuous cycle turning to a vicious one. Either way, given where growth estimates are heading for the next few months, I’d expect more downside.”
Amid the hunt for havens, the yen is on course for its biggest weekly gain since mid-2016, though gold was set for a decline after a multi-month rally.
Elsewhere, New Zealand’s dollar fell 1% Friday as the country reported its first case of the virus and investors bet on policy easing from the central bank. Turkish stocks plunged as tensions between Ankara and Moscow soared.
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