European stocks edged lower with US equity futures as investors weighed a potential setback on progress toward a coronavirus vaccine ahead of a busy period for corporate earnings. The dollar and Treasuries advanced.
S&P 500 contracts fall as much as 0.6% after a report that Johnson & Johnson’s Covid-19 vaccine study has been paused due to an unexplained illness in a participant. In Europe, banks slumped with travel and leisure shares. Stocks were little changed in South Korea and China, where economic data pointed to further recovery for global trade and a robust domestic rebound.
Oil swung to a gain with workers in the US Gulf heading back following Hurricane Delta’s landfall and Libya taking a major step toward reopening its biggest field.
Markets are pausing for breath a day after the Nasdaq 100 surged to the biggest advance since April, powered by technology leaders including Amazon.com Inc., Apple Inc. and Twitter Inc. Amazon is gearing up for its Prime Day bonanza, and Apple for its event where it’s expected to unveil 5G iPhones. Earnings season also gets underway, with JPMorgan Chase & Co. and Citigroup Inc. reporting.
Meanwhile, prospects for a quick end to the stimulus stalemate in the US may be fading with members of the House being told not to expect any action this week and many Senate Republicans rejecting the White House proposal for a deal. On the virus front, the Johnson & Johnson study halt was yet another sign that the race for a Covid-19 vaccine is bumpy.
“The hurdles at the moment come from the uncertainty around the US election and the uncertainty about the timing and effectiveness of a vaccine,” Chris Iggo, Chief Investment Officer, AXA IM Core Investments.
The hearings for the Supreme Court nomination of Judge Amy Coney Barrett continue in the Senate Judiciary Committee as Republicans try to cement a conservative majority on the court before the November 3 election.
Meanwhile, European Central Bank President Christine Lagarde leads off the virtual annual meetings of the International Monetary Fund and the World Bank Group through October 18.
Futures on the S&P 500 Index declined 0.2% as of 9:42 am London time and the Stoxx Europe 600 Index sinks 0.2%.
While The MSCI Asia Pacific Index increased 0.2%, the MSCI Emerging Market Index was little changed.
The Bloomberg Dollar Spot Index rises 0.1% and the euro falls 0.1% to $1.1796.
The British pound drops 0.2% to $1.3044 and the onshore yuan strengthened 0.2% to 6.733 per dollar. The Japanese yen weakened 0.1% to 105.47 per dollar.
The yield on 10-year Treasuries fell two basis points to 0.75% and the yield on two-year Treasuries decreased one basis point to 0.15%.
While Germany’s 10-year yield declined one basis point to -0.55%, Britain’s 10-year yield fell one basis point to 0.261%. Japan’s 10-year yield decreased less than one basis point to 0.03%.
While West Texas Intermediate crude gained 1.1% to $39.88 a barrel, brent crude increased 1% to $42.14 a barrel. Gold strengthened 0.1% to $1,923.95 an ounce.