(Bloomberg) -- European stocks dropped alongside U.S. equity futures on Tuesday, tracking broad declines across Asia amid a series of negative developments in Hong Kong and worries about a deadly virus in China.
The Stoxx Europe 600 Index fell a second day, with banks among the biggest losers after UBS Group AG missed key profitability and cost targets. Retailers also retreated, with luxury stocks suffering on concern the outbreak of a new coronavirus in China will disrupt spending during a key holiday period. News of the illness spreading rattled Asian markets, with shares in Hong Kong hit particularly hard after a credit rating downgrade and a top official calling for new security legislation.
Contracts on the three main U.S. equity benchmarks all pointed to a drop when Wall Street returns from the long weekend. The risk-off mood helped spur some traditional haven assets, with the yen and Treasuries advancing. The Chinese and South Korean currencies weakened. The pound turned higher after better-than-expected U.K. employment figures.
Read more: China Virus Concern Hammers Asian Stock Sentiment
The emergence of the illness in China is stirring 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.
Here are some events to watch out for this week:
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.
These are the main moves in markets:
Stocks
Futures on the S&P 500 Index declined 0.4% as of 9:31 a.m. London time.The Stoxx Europe 600 Index decreased 0.7%.The MSCI Asia Pacific Index fell 1%.
Currencies
The Bloomberg Dollar Spot Index climbed 0.1%.The euro fell 0.1% to $1.1088.The British pound increased 0.1% to $1.3029.The Japanese yen gained 0.2% to 109.95 per dollar.
Bonds
The yield on 10-year Treasuries dipped three basis points to 1.79%.Germany’s 10-year yield fell two basis points to -0.22%.Britain’s 10-year yield decreased two basis points to 0.643%.
Commodities
West Texas Intermediate crude dipped 1.2% to $57.81 a barrel.Gold fell 0.3% to $1,556.83 an ounce.
--With assistance from Livia Yap, Eric Lam and Ranjeetha Pakiam.
To contact the reporters on this story: Cormac Mullen in Tokyo at cmullen9@bloomberg.net;Sam Potter in London at spotter33@bloomberg.net
To contact the editors responsible for this story: Sam Potter at spotter33@bloomberg.net, Yakob Peterseil, Todd White
For more articles like this, please visit us at bloomberg.com
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2020-01-21 08:14:00Z
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