Asian stocks retreated and U.S. equity futures fluctuated as the ongoing spread of the coronavirus outweighed signs China’s economy is recovering.
Stocks were down in more than 1% in Japan, Hong Kong and Australia, and had a more modest drop in China, where markets reopened after a two-day holiday. S&P 500 contracts swung between gains and losses. South Korean shares slipped after the country’s finance minister ruled out another budget for this year. Treasuries were steady and the dollar dipped.
Investors are bracing for a continuation of last week’s risk-off sentiment as coronavirus cases surpassed 10 million globally and a resurgence in the U.S. continues to batter states likes Texas, Arizona and Florida. That overshadowed data that showed China’s industrial companies saw the first monthly increase in profits since November.
“The recovery is going to be much slower and much more uneven than most people believe,” David Hunt, president and CEO of PGIM Inc., said on Bloomberg TV. “Markets are priced for a much sharper V-shaped recovery which we don’t think is likely.”
Meanwhile, China’s central bank said it will implement new monetary tools to make sure liquidity reaches the real economy. The People’s Bank of China said it will increase the proportion of smaller company, credit and manufacturing loans, and continue to lower lending rates, while reiterating that it will keep the yuan stable.
Here are some key events coming up:
- New York Fed President John Williams moderates a discussion with IMF Managing Director Kristalina Georgieva on Monday.
- On Tuesday, Federal Resserve Chairman Jerome Powell and U.S. Treasury Secretary Steven Mnuchin testify before the House Financial Services Committee.
- The U.S. jobs report for June on Thursday may continue data-collection issues from May that appear to understate the true scale of joblessness.
- Friday brings the U.S. Independence Day holiday. Markets are closed, along with government offices.
These are the main moves in markets:
Stocks
- S&P 500 futures fell 0.1% as of 1 p.m. in Tokyo. The gauge fell 2.4% on Friday.
- Japan’s Topix index dropped 1.7%.
- Hong Kong’s Hang Seng index fell 1.5%.
- Shanghai Composite lost 0.7%.
- South Korea’s Kospi retreated 1.6%.
- Australia’s S&P/ASX 200 Index declined 2%.
Currencies
- The yen was at 107.14 per dollar, up 0.1%.
- The offshore yuan rose 0.1% to 7.0765 per dollar.
- The euro bought $1.1240, up 0.2%.
Bonds
- The yield on 10-year Treasuries remained at 0.64%.
- Australia’s 10-year yield was steady at 0.87%.
Commodities
- West Texas Intermediate crude oil fell 1.9% to $37.76 a barrel.
- Gold was at $1,772.73 an ounce, little changed.
Source: Bloomberg