European and Asian stocks dropped following the rout on Wall Street, though declines were contained and US equity futures rose after China pledged to start delivering on trade agreements reached with America. The pound erased a gain as the UK government published legal advice relating to its proposed Brexit deal.
Global markets were left reeling following the steep sell-off in New York, but nerves appeared to steady after China’s Commerce Ministry said Beijing will start to quickly implement specific items where there’s consensus with the US and will push forward on trade negotiations within the 90-day “timetable and road map.” While the Stoxx Europe 600 Index slumped as much as 1.2 percent, that was far less than the 3.2 percent plunge recorded by the S&P 500 a day earlier.
Stocks fell in Japan, Korea, Australia and Hong Kong, and China’s yuan gave up some of its recent surge. The pound drifted as investors digested legal
advice over Prime Minister Theresa May’s Brexit deal, which confirmed that the so-called customs backstop — the insurance mechanism that kicks in if the Irish border issue cannot be resolved — could remain “indefinitely.” Benchmark German bunds rose before reversing, while Italian bonds jumped on mounting optimism for a positive end to the country’s budget spat with the EU.
The break in trading in the US offers respite to investors after a roller coaster few days, and a chance to reassess what might be behind the latest bout of selling. From the trade war to flattening Treasury yield curve there’s no shortage of culprits, but the underlying narrative appears to be mounting concern that the global growth picture is not as robust as it seems.
US financial markets were closed on Wednesday for a national day of mourning to honour former President George H.W. Bush. Fed Chairman Jerome Powell’s testimony to Congress scheduled for Wednesday has been cancelled. Friday brings the US monthly employment report for November. China November trade data are due on Saturday.
Futures on the S&P 500 Index gained 0.6 percent in London. The Stoxx Europe 600 Index sank 0.9 percent to the lowest in more than a week on the biggest dip in more than two weeks. The UK’s FTSE 100 Index sank 1.1 percent to the lowest in almost six weeks on the largest tumble in almost two weeks. Germany’s DAX Index decreased 0.9 percent to the lowest in more than a week. The MSCI Asia Pacific Index sank 1 percent, the largest tumble in more than two weeks. The MSCI Emerging Market Index sank 1.3 percent.
The Bloomberg Dollar Spot Index climbed 0.3 percent to the highest in more than a week. The euro fell 0.1 percent to $1.1328. The British pound gained less than 0.05 percent
to $1.2723, the first advance in a week.
Germany’s 10-year yield gained one basis point to 0.27 percent. West Texas Intermediate crude rose 0.4 percent to $53.46 a barrel, the highest in two weeks.