Monday , February 24 2020

US equity futures slump amid concern for deadly China virus


US equity futures slipped on Tuesday, pointing to declines after the long weekend as investors grapple with worries about a deadly virus in China that sparked earlier declines across Asia and Europe. Treasuries rose.
Contracts for all three of the main gauges were firmly in the red after a miserable session in Asia triggered by the outbreak of the respiratory virus.
Shares in Hong Kong were hardest hit, as news of the illness spreading coincided with a credit rating downgrade and a top official calling for new security legislation.
The Stoxx Europe 600 Index traded off its lows as early panic subsided, though the gauge remained on course for a second day of declines.
Luxury stocks suffered on worries the virus will disrupt spending during a key Chinese holiday period; banks also fell after UBS Group AG missed key profitability and cost targets.
The risk-off mood helped spur some traditional haven assets, and the yen and Treasuries advanced. The Chinese and South Korean currencies sank. The pound turned higher after better-than-expected UK employment figures.
The emergence of the illness in China stirred memories of the SARS outbreak 17 years ago for some market watchers, though it’s not yet as serious.
Still, easing trade tensions, a solid start to earnings season and signs global growth is bottoming have all combined to stoke stocks to multiple records this month; for many investors it may be time for a pause.
“For the market, the more meaningful driver still remains the economic cycle and earnings momentum,” Fan Cheuk Wan, Asia chief market strategist at HSBC Private Bank, said on Bloomberg TV.
“Based on previous experience we have come across during SARS, the impact of the virus is likely to be short-lived.”
Elsewhere, the Bank of Japan kept policy unchanged as expected, though raised its economic growth forecast for 2020. Brent crude dipped below $65 a barrel as ample global supplies offset the loss of exports from Libya.
Companies including Netflix, IBM, Procter & Gamble and Hyundai will post results.
Policy decisions are due from central banks in Canada, Indonesia and the euro zone.
The World Economic Forum, the annual gathering of global leaders in politics, business and culture, is underway in Davos, Switzerland.
Futures on the S&P 500 Index dipped 0.3% in New York. The Stoxx Europe 600 Index sank 0.4%. The MSCI Asia Pacific Index fell 1.1%.
The Bloomberg Dollar Spot Index was little changed. The euro increased 0.1% to $1.1109. The British pound advanced 0.3% to $1.3055. The Japanese yen strengthened 0.1% to 110.07 per dollar.
The yield on 10-year Treasuries dipped two basis points to 1.80%. Germany’s 10-year yield advanced one basis point to -0.22%. Britain’s 10-year yield climbed one basis point to 0.643%. West Texas Intermediate crude dipped 1.4% to $57.74 a barrel.
Gold fell 0.2% to $1,557.70 an ounce.

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