Europe Stocks Climb, U.S. Futures Slip; Oil Rises: Markets Wrap
European stocks rose on Tuesday while U.S. equity futures declined alongside Asian shares as investors weighed fresh trade tensions and an up-tick in coronavirus infections in several nations. The dollar rose for a second day.
The Stoxx 600 Index swung from a loss to a gain as advances for telecom and healthcare shares helped lift the gauge. S&P 500 futures retreated after the Trump administration moved on Monday night to block investments in Chinese equities by a government retirement savings fund. European government bonds dropped and Treasuries drifted.
Global equities have recouped almost half of the plunge from their March low, but the sustainability of the rally remains in question amid poor economic data and company earnings and as countries begin to unwind lockdowns that froze economic activity. Goldman Sachs Group Inc. warned that investors got ahead of themselves and the S&P 500 Index could drop almost 20% in the next three months.
“We have entered into a phase of consolidation where the market looks for clarity in economic trends before loading up again,” said Sebastien Galy, senior macro strategist at Nordea Investment Funds SA. “Time will eventually do the magic,” though the wild card is U.S.-China tensions, he said, because markets have under-priced the risk of a failed bilateral trade deal.
Wuhan, where the pandemic began, reported its first new infections since the Chinese city ended its lockdown last month. South Korea reported a flare-up in virus cases. Russia reported a record number of new cases in one day as it emerged as a new hub of the outbreak in Europe. Germany recorded the first increase in new coronavirus infections in four days as it gradually relaxes restrictions.
Here are some key events coming up:
- Regional Federal Reserve presidents James Bullard, Loretta Mester and Patrick Harker are due to speak at events on Tuesday.
- OPEC gives its monthly oil market report on Wednesday.
- U.S. weekly jobless claims data is due Thursday.
- China on Friday releases industrial production and retail sales data for April.
These are the main moves in markets:
- Futures on the S&P 500 Index decreased 0.4% as of 8:16 a.m. London time.
- The Stoxx Europe 600 Index rose 0.1%.
- The MSCI Asia Pacific Index fell 0.8%.
- The Bloomberg Dollar Spot Index gained 0.1%.
- The euro increased 0.1% to $1.0818.
- The British pound was little changed at $1.2339.
- The Japanese yen strengthened 0.1% to 107.60 per dollar.
- The yield on 10-year Treasuries dipped less than one basis point to 0.71%.
- Germany’s 10-year yield increased two basis points to -0.49%.
- Britain’s 10-year yield was unchanged at 0.28%.
- West Texas Intermediate crude climbed 2.5% to $24.74 a barrel.
- Gold strengthened 0.2% to $1,701.10 an ounce.