U.S. Futures, Europe Stocks Drop After Asia Slump: Markets Wrap - Yahoo Finance

U.S. Futures, Europe Stocks Drop After Asia Slump: Markets Wrap

(Bloomberg) -- U.S. equity futures slipped on Tuesday, pointing to declines after the long weekend as investors grappled with worries about a deadly virus in China that sparked earlier losses across Asia and Europe. Treasuries rose.

Contracts for all three of the main American gauges were firmly in the red after the Asia sell-off, triggered by reports that the respiratory virus was spreading. Shares in Hong Kong were hardest hit, as the news coincided with a credit rating downgrade and a top official calling for new security legislation.

The Stoxx Europe 600 Index recovered from the worst of its drop, though the gauge remained on course for a second day falling. Luxury stocks suffered on worries the virus will disrupt spending during a key Chinese holiday period; banks also retreated after UBS Group AG missed key profitability and cost targets.

The broader risk-off mood helped spur some traditional haven assets, and the yen and Treasuries advanced even as gold fell. The Chinese and South Korean currencies sank. 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 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.

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 fell 0.3% as of 8:28 a.m. New York time.The Stoxx Europe 600 Index sank 0.4%.The MSCI Asia Pacific Index fell 1%.

Currencies

The Bloomberg Dollar Spot Index was little changed.The euro advanced 0.2% to $1.1117.The British pound gained 0.5% to $1.3074.The Japanese yen climbed 0.1% to 110.05 per dollar.

Bonds

The yield on 10-year Treasuries dipped three basis points to 1.79%.Germany’s 10-year yield fell less than one basis point to -0.22%.Britain’s 10-year yield climbed one basis point to 0.643%.

Commodities

West Texas Intermediate crude dipped 1.2% to $57.85 a barrel.Gold fell 0.5% to $1,553.46 an ounce.

--With assistance from Livia Yap, Eric Lam, Ranjeetha Pakiam and Cormac Mullen.

To contact the reporter on this story: 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

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