(Bloomberg) -- The overnight rally in U.S. stock futures evaporated as the sell-off sparked by the rapidly spreading coronavirus picked up steam Monday. Treasuries surged, sending the 10-year rate closer to 1%.
Contracts on the S&P 500 lost more than 1% after wiping out a gain that reached 2.4% on speculation central banks would coordinate to ease monetary policy. Sentiment soured as more cases were reported around the world and the OECD cut its forecast for global growth.
European shares also reversed a big early jump, with Italian stocks under the most pressure as the epicenter of the region’s virus cases. Most core European bonds gained, tracking Treasuries as they rallied for an eighth day. The dollar slipped against the euro and most major currencies.
The attempt at a bounce earlier followed a rare statement on Friday from the Federal Reserve that opened the door to a rate cut based on the “evolving risks” posed by the outbreak. Central banks in Japan and the U.K. followed suit with supportive messages. Investors are weighing the comments against increasing pessimism from economists on global growth, with fears mounting that the virus will trigger more losses after the S&P 500 Index’s worst week since 2008. World growth will sink to levels not seen in over a decade as the outbreak hammers demand and supply, the OECD said.
The global death toll from the virus has surpassed 3,000. U.S. cases climbed over the weekend, with the first infections appearing in New York City, Brussels and Berlin, while cases jumped in hot spots of Italy and South Korea. Positive tests in Italy jumped by more than 500 to 1,694 on Sunday with 41 deaths. Lombardy, the region that includes the financial capital of Milan, accounted for almost 1,000 cases.
U.S. President Donald Trump is set to meet with pharmaceutical industry executives at 3 p.m. Washington time Monday.
Elsewhere, Australian and New Zealand 10-year bond yields hit fresh record lows.
Here are some key events coming up:
A key factory gauge on Monday is projected to show that U.S. manufacturing came close to stagnating last month. The ISM purchasing managers index is estimated to fall to 50.5 from 50.9.The Reserve Bank of Australia sets policy on Tuesday.U.S. citizens in states including California and Texas will vote on “Super Tuesday” for a Democratic candidate to run against President Donald Trump in November’s election.The Bank of Canada has a rate decision on Wednesday.OPEC ministers gather in Vienna on March 5-6.
These are the main moves in markets:
Stocks
Futures on the S&P 500 Index decreased 1.3% as of 6:58 a.m. New York time.Nasdaq 100 Index futures fell 0.9%.The Stoxx Europe 600 Index dipped 1.6%.Italy’s FTSE MIB Index declined 3.9%.The MSCI Asia Pacific Index jumped 0.8%.
Currencies
The Bloomberg Dollar Spot Index fell 0.3%.The euro increased 0.8% to $1.1119.The British pound fell 0.3% to $1.2786.The Japanese yen strengthened 0.3% to 107.54 per dollar.The South Korean Won strengthened 1.8% to 1,193.57 per dollar.
Bonds
The yield on 10-year Treasuries decreased 10 basis points to 1.05%.The yield on two-year Treasuries declined 20 basis points to 0.72%.Germany’s 10-year yield fell five basis points to -0.66%.Australia’s 10-year yield declined one basis point to 0.808%.
Commodities
West Texas Intermediate crude jumped 0.5% to $45 a barrel.Iron ore surged 5.6% to $86.85 per metric ton.LME copper increased 0.4% to $5,658 per metric ton.LME aluminum climbed 0.1% to $1,695.50 per metric ton.
--With assistance from Lin Zhu, Lilian Karunungan and Adam Haigh.
To contact the reporter on this story: Todd White in Madrid at twhite2@bloomberg.net
To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Sam Potter
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2020-03-02 12:04:00Z
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